The American Academy of Actuaries says the United States should strengthen the Social Security old age pension system by increasing the normal retirement age.
Raising the retirement age to 70 could cut the projected Social Security program deficit in half, AAA, Washington, argues in new position statement.
“As life expectancy increases, the percentage of workers’ lives spent in retirement continues to grow, while the number of working years stays relatively constant,” says the AAA. “Inevitably, Social Security’s costs will exceed what its scheduled financing will support…. While Social Security’s financial soundness could be restored in many different ways, we believe that any solution package should include increases in the retirement age.”
Simply speeding up an ongoing effort that is increasing the normal retirement age for Social Security to 67, from 65, one month at a time could cut the projected program deficit 10%, according to AAA projections.
Keeping the current schedule of normal retirement age increases to age 67–and then continuing to increase the normal retirement age by 2 months every year until it reaches age 70–could cut the projected deficit 50%, the AAA estimates.
The AAA contends that the demographic problems facing Social Security appear to be permanent, not simply a temporary effect of the aging of the baby boomers. “Long after all the baby boomers living have departed, Social Security’s income will cover only about three-fourths of its cost,” AAA says.
The AAA attributes much of the increase to the rise in longevity. The average life expectancy for a 65-year-old man, for example, increased to 16.7 years in 2007, from 11.9 years in 1949, and Social Security program actuaries estimate average life expectancy for 65-year-old men will be 18.8 years in 2040, AAA says.
For women, average life expectancy at age 65 has increased to 19.2 years in 2007, from 13.4 years in 1940, and could increase to 20.9 years by 2040.
AAA represents about 16,000 actuaries in efforts to give government officials and other policymakers actuarial advice.