The retirement age is a crucial factor for Social Security and Medicare because it determines when individuals become eligible to receive benefits from these programs.
Social Security is a federal program that provides retirement, disability, and survivor benefits to eligible workers and their families. Initially, at the outset of these programs, the full retirement age was set at 65. However, a 1983 overhaul of this program began raising the age for full retirement. The retirement age for Social Security benefits is currently 66 for those born between 1943 and 1954, and it gradually increases to 67 for those born in 1960 or later. If a person starts collecting Social Security benefits before their full retirement age, their benefits are reduced. Conversely, if they delay their benefits past their full retirement age, they receive a higher monthly benefit. Those whose retirement age is 67 will only receive 70% of their benefit if they retire at 62. If full retirement age is increased, it could mean a further reduction in early retirement benefits.
When Congress made changes to Social Security in 1983 it envisioned that newly implemented 401K plans would provide retirement assistance and decreased dependency on the program. Economists point out that that scenario has not occurred. Employer provided pension plans used to provide retirement income. Those gave way to 401K plans which put the responsibility of saving on the worker. Labor economists show that many retired workers have little or no savings plan at all. Thus, many Americans are wholly dependent on Social Security for retirement income.
Medicare is a federal health insurance program that covers individuals who are 65 years of age or older, as well as individuals with certain disabilities and those with end-stage renal disease. The age of eligibility for Medicare has remained at 65 since the program’s inception, but there have been proposals to raise the age to 67 to coorelate with the full retirement age currently.
The fight in Washington DC over raising the retirement age for both Medicare and Social Security is due to the increasing costs associated with these programs. As the population ages and life expectancies increase, more people are becoming eligible for these benefits and are living longer in retirement. This places a strain on the funding of these programs and raises concerns about their long-term sustainability.
Proponents of raising the retirement age argue that it would help to reduce the financial burden on these programs by delaying the start of benefits for individuals who are still able to work and earn an income. Raising the retirement age is a mechanism to cutting benefits. Proponents also point out that an older full retirement age better matches life expectancy numbers. They argue that life expectancy has increased six years since Social Security was enacted in 1935. However, opponents argue that raising the retirement age would disproportionately affect low-income and physically demanding occupations, as those individuals may not be able to continue working until the new retirement age.
Overall, the fight over raising the retirement age for Social Security and Medicare is a complex issue with many competing interests and factors to consider. Ultimately, any changes to these programs will need to balance the need for long-term sustainability with the need to protect the well-being of current and future beneficiaries.