One thing that a lot of people in the country look forward to after working for all their lives is retirement and once they hit retirement, they have expectations to receive certain help from the government. One of those expectations is to receive social security. We pay into it on every paycheck from the day we start working until the day when we finally retire. “As of June 2018, about 175 million people worked and paid Social Security taxes and about 62 million people received monthly Social Security benefits” (SSA,2019). Currently in the program one can start to receive their benefits as early as 62 years old, but the average age is around 65 years old to start collecting. Unfortunately, however there is a “funding shortfall that, if left unaddressed, could result in a major reduction in retirement benefits across the board” (Backman,2019). So, what does this mean? It means that over time future retires may not have social security promised to them like it has been now and there could be cuts to many other benefits promised upon retirement to retirees current and future. However, there are proposed changes to help hopefully change this around in 2020. One change that may come again is raising the age to collect your benefits. In 1983 there was a legislation passed that stated there would be a gradual change in the age when one can collect from 65 to the age now of 67 years of age. “As it currently stands, only 80% of promised benefits will be payable by 2035 if nothing is done to shore up Social Security” (Konish,2019). The thought is with changing the age of collection, it could convince people to work longer and not retire so early and help to fix this shortage long term.
On the other hand, it is seen as unfair and controversial to do this to seniors who really depend on getting their social security to stay afloat once they leave the workforce. Many people do not have the abilities to have saved a lot for retirement and not many employers are offering retire plans for their employees. Unfortunately, due to this social security is very important for many seniors leaving the workforce. Raising the age could be good but also bad as it hinders many from leaving at a reasonable age to retire but also if they have to leave through circumstances such as being terminated, laid off, etc. If they must wait to collect, then this could lead to other financial issues for them.
In our economy something to be concerned as well with this is the effects of spending. Since these transfer payments become the main source of income for many retirees, they will affect them spending any money back into the economy. When looking at the number of retirees entering retirement and looking at his idea of increasing the age, it could have a negative impact. What little savings a retiree has they will be less likely to spend and try to save as much as possible until the day they would collect.
Do you think they should raise the age of social security? Will this change work long-term? With such a controversial issue that affects us all how can the decision really be made and what will the outcome be? How will this affect the economy?
Backman, Maurie. “Could Social Security's Full Retirement Age Rise Again?” USA Today, Gannett Satellite Information Network, 27 Nov. 2019, www.usatoday.com/story/money/2019/11/27/could-social-securitys-full-retirement-age-rise-again/40684869/.
Konish, Lorie. “The Social Security Retirement Age Could Go up. Here's Why That Change Won't Be Easy.” CNBC, CNBC, 15 Nov. 2019, www.cnbc.com/2019/11/13/why-raising-social-securitys-full-retirement-age-wont-be-easy.html.
“Understanding the Benefits.” Social Security Administration, 2019, www.ssa.gov/pubs/EN-05-10024.pdf.