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Presidential candidate Nikki Haley proposed raising the full retirement age for future Social Security beneficiaries during a town hall meeting in Iowa — a controversial suggestion, given its potential impact on benefits.
“You reform the entitlements, but you do it in a way that you don’t take anything away from seniors or people who are getting ready to retire,” she said at the meeting, seen in a video by local news site The Daily Nonpareil. “You focus on the new generation. You focus on what’s next.”
Haley didn’t state what age the full retirement age, also known as FRA, should be, or when the government should enact this change.
Raising the full retirement age is a controversial subject, as some critics label it a benefit cut. Individuals who can’t change the age they need to retire will get less in benefits from the adjustment, as will people who decide to delay their retirement age, argued Alicia Munnell, director of the Center for Retirement Research at Boston College. “Currently, those claiming at age 62 receive only 70% of the benefit available at 67,” she wrote in a MarketWatch column. “If the full retirement age were increased to age 70, that amount falls to 55%.”
Social Security’s full retirement age hasn’t been changed since 1983, when the law sought to increase the retirement age gradually for individuals from age 65 to 67. Age 65 was the original full retirement age for beneficiaries, set when Social Security was created in 1935.
As it currently stands, anyone born in 1937 or earlier has a full retirement age of 65, and that FRA increases two months every year after until 1943. Between 1943 and 1954, the full retirement age is 66. For anyone born in 1960 or later, the full retirement age is 67. Individuals can start claiming benefits at age 62, though any time prior to full retirement age would result in a permanent decrease in benefits. (Comparatively, delaying Social Security benefits until age 70 would increase a beneficiary’s check, too.)
See: Are mental-competency tests for older politicians ageist?
The notion of changing FRA for younger generations isn’t completely unheard of — it’s what happened during that 1983 reform that increased the age from 65 to 67, Stephen Goss, Social Security’s chief actuary, told MarketWatch. The law was passed in 1983, but the change only took effect for those turning 62 in 2000. Goss also said an increased full retirement age doesn’t fix Social Security’s insolvency problems (the two trust funds that support Social Security are expected to be depleted by 2035, at which point beneficiaries would see a 20% cut). The increased FRA would have to be in line with longer life expectancies, he said.
Haley also suggested limiting benefits for wealthy Americans. “Many of them will tell you they don’t even want it,” she said. The former South Carolina governor said the cost-of-living adjustment should also be tied to inflation, “something Republicans and Democrats agree on,” she said. “We can get that done.”
Haley didn’t specify what type of inflation benefits should be tied to — they’re currently linked to the consumer price index for urban workers, though legislators have proposed switching to the consumer price index for the elderly, which measures the “basket” of goods and services older Americans spend on.
In her speech, Haley said Medicare should be expanded in the form of Medicare Advantage to promote more competition and choice.
