What Raising Social Security Retirement Age Would Mean

Raising the Social Security retirement age could improve the beleaguered program’s finances, but workers would pay a steep price, according to recent studies.

Some Republican lawmakers and an influential think tank have proposed raising the age to receive full retirement benefits to 69 from 67. Under this proposal, workers would be faced with the choice of working longer or living on less money during their retirement. On average, they would take home 8% less benefits over their lifetimes compared to the current system, the Congressional Budget Office (CBO) estimated last month.

Social Security faces a looming crisis as trust funds that finance the program are on track to run dry by 2034. At that point, the government would be forced to cut benefits to 83% of their previous levels to keep the program running.

Republicans are offering to raise the age threshold partly to counter Democrats’ proposals to raise taxes on high earners to cover the gap. These proposals are the latest in a decades-old debate over whether to raise the retirement age.

The Case For Working Longer

Proponents of raising the retirement age say it would help the program cope with the fact that people are living longer and, therefore, receiving more benefits over their lifetimes than they were in 1983 when the age to receive full benefits was raised to 67 from 65. A person born in 1983 could expect to live to the age of 74.6 on average, compared to 78.7 for someone born in 2018, according to data from the Census Bureau.

Longer lifespans mean some people stay healthier longer and can work more when they’re older. Men could work 4.2 years longer in 2010 than they did in 1977, a 2016 analysis by economists by the National Bureau of Economic Research found.

“Increased life expectancies, improved healthcare, and the shift away from physically demanding work have increased older Americans’ work capacity,” Rachel Greszler, a senior research fellow at the Heritage Foundation, a conservative think tank, wrote in a blog post in June. “Older workers’ wisdom and experience provides an invaluable insight and mentorship to younger workers. And today’s labor market affords increasing opportunities for older workers to gradually ease into retirement, instead of abruptly exiting their careers.”

The Heritage Foundation’s support of the idea is significant because the think tank could help set the legislative agenda if Republicans prevail in the 2024 election. The foundation said in 2018 that the Trump administration had adopted two-thirds of its policy recommendations in his first year in office.

Republicans’ budget proposals have also called for raising the retirement age. In March, the Republican Study Committee, a group of 180 Republican legislators, proposed raising the age for full retirement benefits, among other reforms to the program, as part of their 2025 budget plan.

Raising the age minimum would improve Social Security’s long-term financial outlook. If the age were raised and benefits were paid in full, the program’s spending would take up 5.4% of the U.S. gross domestic product by 2054, compared to 5.9% if it stayed the same. However, according to the CBO, the policy proposal would not save enough money to change the date the trust fund runs out. 

The Case Against Raising the Retirement Age

Despite the financial benefits for the program, raising the retirement age is unpopular with the public. In a Quinnipiac poll in 2023, 78% of U.S. adults opposed the idea.

In addition to working longer or living on less money, opponents say a major sticking point is the unequal effect the proposal would have on workers in different occupations. Although the labor market as a whole may have shifted to less physically demanding jobs, there is still plenty of blue-collar work that grinds down workers’ bodies over a period of years, often leaving them unable to work as old age approaches. 

A 2020 study of Danish workers found that people with physically demanding jobs could expect to work for at least two fewer years than those with less physically demanding careers.

“Women who are working the toughest and most physical jobs, like care workers, may not be able to work longer,” Courtney Anderson, a fellow at the National Women’s Law Center advocacy group, wrote in a blog post. “Life expectancy gains have almost exclusively gone to higher earners, making this ‘solution’ not only insufficient but most importantly very discriminatory.”

Splitting The Difference

Some experts have tried to split the difference between the two positions. 

For example, lawmakers could raise the retirement age for highly paid workers while keeping it as-is for blue-collar jobs. Alicia H. Munnell, director of the Center for Retirement Research at Boston College, proposed linking retirement age to education since better-educated workers are often able to work longer.

“The more privileged in our society are living longer and healthier lives, but the majority have not seen great gains in life expectancy, much less in healthy life expectancy,” she wrote in a blog post in April. “Let’s be clever here and raise the retirement age for those who can work without doing any further damage to those who cannot.”