The normal Social Security retirement age should go up, according to the American Academy of Actuaries (AAA).
Thomas Terry, chair of the public interest committee at the AAA, Washington, has delivered that message in a letter sent on behalf of the AAA to the co-chairs of the National Commission on Fiscal Responsibility and Reform.
The commission is trying to find ways to reduce the federal budget deficit and deal with Social Security and Medicare benefits obligations.
The AAA is a nonpartisan professional group formed to give actuaries a voice in the making of public policy.
The AAA now supports the adoption of an increase in the retirement age, Terry says.
Some say that an increase in the Social Security retirement age is equivalent to a benefit cut, and some have narrower concerns about the idea of raising the Social Security retirement age, such as concerns about the effects on workers in physically demanding jobs, Terry says.
In reality, Terry says, the steadily increasing U.S. life expectancy is giving workers what amounts to
a de facto automatic increase in benefits.
“Increasing the retirement age can contribute significantly to stemming this trend and make the program solvent and sustainable,” Terry says.
To maximize the benefits of an increase in the retirement age, the federal government must support that increase with other actions, Terry says.
He notes, for example, that the Internal Revenue Service now prohibits tax-qualified pension plans from using a normal retirement age higher than age 65.
“In the interest of consistency in signaling, Social Security, as well as pension plans, could benefit from reinforcement if plan sponsors were allowed to use a normal retirement age equal to that for Social Security,” Terry says.
The government should try to come up with mechanisms, such as creating special income programs for workers in physically demanding jobs and programs to fight age discrimination, such as reductions in the payroll tax for older workers, to help specific groups of workers who might be affected more than others by an increase in the retirement age, Terry says.