With the new administration taking office, many Republicans are using the opportunity to express their views on Social Security and its financing gap. One example is Missouri Republican Congressman Mark Alford, who appeared on Fox News and promoted the concept of raising the retirement age to help reduce federal government spending.
He described a recent discussion with Elon Musk and Vivek Ramaswamy, who will lead the unofficial Department of Government Efficiency [DOGE] under Donald Trump beginning in January, and the ideas discussed.
Alford stated on Fox. “I believe there’s a way to move the retirement age back a little bit on the front end, as people are living longer and retiring later.” He asserts that the “$36 trillion” national debt and its interest payments are “unsustainable,” necessitating a reduction in government expenditure to rectify the situation. And, of course, the cuts must come from social programs, which have no value to Republicans. “It’s going to mean cuts to the 24 percent of the discretionary spending that we have, and it’s also going to mean looking long-term at the front end of some programs like Social Security and Medicare.”
Would raising the retirement age have a positive impact on Social Security?
The current full retirement age for people born in 1960 or later is 67, up from 65, but even if it rises further, it is unlikely to be popular and may diminish overall lifetime payments for beneficiaries. Furthermore, it would not alleviate the current funding crisis.
According to Stephen Kates, lead financial analyst at RetireGuide.com, raising the age at which people can claim benefits “is a backward way of simplifying and reducing benefits.” According to him, “The earliest age someone can claim benefits is 62, and this usually results in a [roughly] 30% decrease in monthly benefits when compared to their expected benefits at full retirement age, which is 67 for people born after 1959.” Increasing either the earliest or full retirement age would result in benefits starting later and being smaller than they are now for future retirees.
Lisa Whitley, a financial coach and planner at Money ByLisa, concurred with the assessment and went on to say, “I do not feel that there is a constituency among the public for raising the retirement age. The reality is that most people already receive a ‘discounted’ pension by making claims before reaching full retirement age. Raising the FRA will worsen the wealth disparity between low- and high-income households. Even for those who are willing to wait until FRA, achieving a higher life expectancy does not necessarily equate to working longer.
Other solutions, such as raising or even abolishing the salary cap subject to FICA payments, would be better for the program than federal budget cuts, but because this would tax the wealthy, no Republican administration would support the plan.
In an article for the Heritage Foundation, Rachel Greszler, a senior research scholar at the Roe Institute, proposed a new full retirement age of 70. According to her essay, it would assist in addressing the financing cliff and would be consistent with the Republican Study Committee’s March 2024 budget, which proposed the same idea.
The idea has a lot of Republican backing, with Georgia Representative Richard McCormick also suggesting cuts. “We are going to have to make some difficult decisions. We need to bring in the Democrats to discuss Social Security, Medicaid, and Medicare. We know how to save hundreds of billions of dollars; all we need is the courage to confront these issues.
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