Why retirement age matters for social security and medicine

(CNN) 62, 65, 67, 70.

All these ages are important for social security and medicine.

And those ages are also the subject of a contentious debate over how to shore up the faltering economy of massive welfare programs.

Republican presidential candidate Nikki Haley recently zeroed in on raising the retirement age for Americans in their 20s as a way to reform Social Security, saying it should match their life expectancy. South Carolina GOP Rep. Nancy Mace echoed the controversial position on CNN’s “State of the Union” last Sunday. Neither of them said what the new retirement age should be.

Many may think that people can start collecting their full Social Security benefits at age 65, which was the retirement age for decades. But Congress changed that as part of the 1983 overhaul of the entitlement program.

Lawmakers gradually raised the full retirement age — the first to be affected were people who turned 65 in 2003. Americans born in 1960 or later must wait until they turn 67 to receive the full benefit.

However, unless Congress acts, neither Social Security nor Medicare will be able to provide their full benefits over the next decade.

Social Security trustees said last year that the program’s combined pension and disability funds will be depleted in 2035, when Social Security will take in just enough revenue to pay 80 percent of planned benefits. A more recent projection by the Congressional Budget Office pegged the pension fund depletion date at 2032.

Meanwhile, Medicare lobbyists said last year that its hospital insurance fund, known as Part A, would run out of funds by 2028. At that time, it can only pay 90 percent of the benefits. CBO set the date as 2033.

The retirement of baby boomers has put a lot of stress on the two programs. As the US population ages, there are fewer workers paying into the programs and supporting an ever-growing number of beneficiaries who are also living longer.

In all, nearly 66 million retired workers, their dependents and survivors, disabled workers and their dependents receive monthly Social Security payments. For many retirees, benefits make up the majority of their parents’ income.

And more than 65 million seniors and people with disabilities are enrolled in Medicare.

Proposals to raise the retirement age typically focus on when people should be able to collect full benefits, although some plans also raise the age of early retirement and Medicare eligibility.

Proponents argue that Americans are living longer and should be able to stay in the workforce longer. Opponents say that some workers, especially those in physically demanding jobs, must be able to retire at an earlier age.

Raising the Social Security retirement age is a benefit cut, but people support this method to strengthen the program, said Alicia Munnell, director of Boston College’s Center for Retirement Research.

“People are saying, ‘We can do it either by cutting benefits, by raising taxes, or by raising the full retirement age,'” said Munnell, who favors increasing revenue. to supplement the funds. “There is no third option – there are only benefit cuts or tax increases. Raising the full retirement age is a mechanism to cut benefits.”

Deferring retirement benefits is a hot topic not only in the US but also in Europe. The French government is currently pushing through controversial plans to raise the country’s retirement age from 62 to 64, sparking weeks of protests and strikes.

Here’s what you need to know about retirement age in the United States

Age 62: Americans can apply for social security benefits as early as age 62. But it results in a lifetime reduction in payments.

For example, those whose full retirement age is 67 will only receive 70% of the benefit if they apply at age 62.

Raising the full retirement age could mean an even bigger cut in benefits, depending on how the legislation is written.

Congress allowed women to receive a reduced benefit at age 62 in 1956 and extended the option to men in 1961.

Fewer people apply for early retirement. About 25 percent chose to do so in 2021, up from 52 percent in 2005, according to an American Academy of Actuaries review of Social Security Administration data.

Age 65: In this case, you can register for Medicare coverage. Most people enroll in both Part A, which covers hospital stays, skilled nursing facility care, hospice care, and some home health care, and Part B, which covers doctor visits, outpatient care, medical supplies, and preventive services.

The first registration period begins three months before the 65th birthday and ends three months after the month of birth. Those who wait to sign up may face obstacles, such as having to pay fines or losing coverage.

Age 65 was also the average age of social security claimants in 2021 – exactly 65.1, according to the Academy.

Age 67: Americans born in 1960 or later must wait until age 67 to receive full Social Security benefits.

This age is typically subject to reform, with some options raising it to 70 for future retirees. According to Munnell, this could wipe out about a third of the Social Security Fund’s 75-year deficit.

Raising the full retirement age would better adapt it to changes in life expectancy, which has increased by about six years since social security was established in 1935, says Linda Stone, senior pension researcher at the Academy.

Age 70: Those who delay their retirement until age 70 will receive a larger monthly Social Security benefit, thanks to a credit union created in 1972.

For example, workers born in 1960 can receive 124 percent of their benefit if they don’t enroll until age 70.

However, exceeding this age will not increase their monthly payments any further, so the Social Security Administration recommends that people apply at age 70, even if they are still working.

Few people delay collecting their social benefits, even though the proportion is increasing. According to the Academy, about 21 percent decided to take benefits after full retirement age in 2021, compared to 5 percent in 2005.

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