House leaders’ introduction of a proposed budget from the Republican Study Committee has sparked a heated discussion concerning the future of Medicare and Social Security in the United States.
The proposal asks to raise Social Security’s full retirement age to 70 for those born in 1978 or later. The plan also supports extending Medicare’s qualifying age to 67, when Social Security’s full retirement age will also be reached.
President Biden brought up the subject this week in his State of the Union speech. He urged Democrats and Republicans to work together to prevent Social Security and Medicare reforms. Experts are divided on reducing benefits to preserve programs’ viability.
The head of Boston College’s Centre for Retirement Research, Alicia Munnell, contends that there are only two options for addressing Social Security’s financing shortfall: cutting benefits or raising income. She claims there is no middle ground and that increasing the retirement age is a benefit cut.
The debate over the retirement age is nothing new.
Retirement Age Extension Not Suitable for the Present Economics
In 1983, the Social Security Act underwent amendments phased in a 67-year-old full retirement age today. However, labor economists such as Teresa Ghilarducci of The New School declare this revision a “major failure.” Also, the present proposal is based on a 40-year-old strategy that does not fit today’s economy. Moreover, she questioned the concept of raising the retirement age.
Ghilarducci notes that white, college-educated people can work until 70, but minorities, low-educated, etc., may lack the same life expectancy.
Dispelling the Misconception of Prolonged Labor
Ghilarducci also contends that living longer and being able to work longer are not equivalent. Raising the retirement age hasn’t necessarily affected who is eligible for Social Security payments. Most early Social Security filers still work, using benefits to boost low pay. This is a challenge when they are no longer employed, and their benefits check is insufficient to meet their needs. This helps to explain why the number of elderly people living in poverty is increasing.
Last but not least, raising the Social Security and Medicare retirement age is a controversial notion among academics. While some believe it is essential to ensure the programs’ survival, others argue that it reduces the benefits. Therefore, it will only deepen the inequalities between racial and socioeconomic groups.