Seventy-five years ago, Social Security became our government’s retirement plan for all citizens, but today with the recent collapse of the stock market people have begun to rethink both the Social Security System and their personal retirement plans. Many have voluntarily pushed their planned retirement date further back.
But – did you know that under the present law the traditional age of 65 for retirement has already been pushed back to 67 by the year 2027. And, after 2027, the retirement age would be lifted again to 68 and 70 if several plans floating around Washington were adopted.
The rationale for lifting the retirement age is that since people are now living longer, our Social Security System won’t be able to handle all the retirees who insist on living long past today’s retirement age of 65. By raising the age, proponents of the increase argue that the financial burden on the Social Security System will be eased
For this argument to be valid our stock market and economy will have to be stuck in a low unrealistic growth rated of 1 percent per annual for the next century. However, even an extremely low growth rate of just 2.5 percent would easily carry the Security System’s load and end up with a reserve of tens of trillions by the end of the century.
Another point overlooked by the “age changers” is that when someone does retire the system is actually enriched, because two people, the retiree and the new employee, are taxed and now both contribute to the Security fund.
With two people, instead of just one, receiving incomes, buying power is increased and the economy is stimulated to grow, and as employment rises so does the Social Security Trust Fund.
Raising the retirement age is obviously not needed based on financial arguments and, unfortunately, it would also hurt the low income citizens of our country.
We should remember that when the Social Security System was set up 75 years ago it was planned not only to provide income for people too old to work and too young to die, it was also intended to do a little extra for the aged who were poor.
The head of a household whose age falls between 24 and 34 and whose lifetime earnings is approximately $25,000 will receive benefits more than 2 percent more of his lifetime earnings than will those with incomes above $75,000. Therefore, raising the retirement age is basically the same as effecting an across-the-board cut, and would be felt disproportionately by those at the bottom of the income ladder.
Another factor often over-looked by those proposing an age increase is the assumption rich and poor live to the same ripe old age – but, they don’t.
The poor don’t live as long as the rich and raising the retirement age from just 67 to 70 would mean a 25 percent decrease in the period of benefit receipts for the low-income male, but only a 15 percent drop for the high income male.
Raising the retirement age could thus prove to be not only bad for the American economy, but also bad for many Americans whom our Social Security System originally wished to help.
