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GAO Reports on Raising Social Security Retirement Age
I f the numbers turn out as expected, the retirement en masse of the baby boom generation and the longer life expectancy of retirees (73 for men and 79 for women born in 1997) will force Social Security into insolvency by 2032. On the face of it, raising the age at which retirees can start collecting benefits would seem to be a quick fix for the fund meltdown that experts predict will occur during the next few decades.
In Social Security Reform: Implications of Raising the Retirement Age, the GAO evaluated the likely results of tinkering with the age eligibility requirements. According to the report, raising the normal retirement age (NRA) and earliest eligibility age (EEA) could significantly improve the financial stability of the Social Security trust fund.
An additional benefit of raising the retirement age would be the increased economic growth that would result from older, more experienced workers extending their careers and postponing retirements.
Although the report cited a net positive result from raising the retirement age, it also pointed out that changes in the NRA (currently 65, but increasing to 67 by 2022) and the EEA (62) could have some negative consequences as well.
Boosting the retirement age might lead to an increase in the number of disability insurance claims. A greater number of older workers will be employed, and it is possible that many of thesedenied retirement benefitswould turn to disability insurance as an alternative. The report concluded that even so, the improved fiscal health of Social Security would outweigh the financial impact of the increased disability claims.
The GAO report also said increasing the retirement age might have a negative impact on unemployment. Older blue-collar workers and workers suffering poor health could be forced from their jobs by the physical demands of their employment before they were eligible for retirement benefits.
The report concluded that depending on how fast and how much the retirement age and minimum eligibility requirements were changed, the increases could have an overall positive impact on the financial health of Social Security. The GAO report recommended that the changes be implemented as part of a comprehensive strategy in order to prevent the reforms from disproportionately affecting any particular group of workers.