The debate surrounding raising the retirement age for Social Security continues to be a point of contention among many individuals. Currently, Social Security payments are designed to reach 100% of what a recipient is owed at their full retirement age (FRA), which varies based on their birthdate. Recipients can begin taking payments as early as age 62, but the amount is reduced for each month prior to their FRA. The longer a recipient delays taking Social Security, the higher the amount increases until age 70. After that point, the amount remains constant with only cost-of-living adjustments.
Increasing the retirement age results in a decrease in benefits received by recipients. For example, changing the FRA from 67 to 68 would lead to approximately a 7% decrease, while setting the FRA at age 70 would result in a 23% reduction in benefits. Many individuals have pointed out the discrepancies in congressional payrolls and retirement benefits compared to Social Security. While Congress does use a different retirement benefit system, the amounts paid out to members are minimal in comparison to Social Security payments, making any changes to congressional benefits inconsequential in addressing the larger issue.
Critics argue that the government is wasting money on frivolous uses and benefits for undocumented aliens. While there is certainly government waste that occurs, the larger sums of money are often tied to specific decisions. For instance, during the pandemic, Congress approved $5 trillion in pandemic stimulus money, despite some instances of fraud and inefficiency in distributing the funds. The decision to provide aid ultimately helped bolster the economy and prevent a deeper recession. In contrast, the Tax and Job Cuts Act of 2017 benefited corporations and wealthy Americans, failing to deliver on promises of job creation while generating a cost of $2.3 trillion if tax benefits were made permanent.
Concerns have also been raised about non-citizens receiving Social Security benefits. It is important to note that only legal residents who meet all eligibility requirements, including having paid into the system, can receive benefits. Additionally, the federal government has borrowed from Social Security through the purchase of special financial instruments, which by law are required to pay interest and eventually the principal. While the government does borrow from Social Security surpluses, interest rates were historically low for many years, leading to a lack of sufficient reserves as baby boomers retire and live longer without enough younger workers contributing to the system.
In conclusion, the debate over raising the retirement age for Social Security is complex and multifaceted. While some argue for increasing the FRA to address financial challenges, others highlight issues of waste and misallocation of funds in government spending. Ultimately, finding a sustainable solution will require a comprehensive approach that considers the needs of current and future retirees, as well as the broader economic impact of potential changes to the Social Security system. As discussions continue, it is essential to consider the long-term implications and consequences of any proposed reforms to ensure the stability and effectiveness of Social Security for all beneficiaries.
