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Urban Institute:
With Social Security's trust funds facing depletion by 2040, many observers suggest partly addressing the projected deficit by raising the age at which workers can first receive retirement benefits.
While a higher retirement age would bolster the system by reducing benefits and encouraging people to work longer, would it disproportionately hurt vulnerable populations, who generally do not live as long as other retirees and typically depend more on Social Security?
New research from the Urban Institute's Retirement Policy Project says lifetime benefits for all groups would be lower, but less so for those with lower lifetime earnings and less education.
Raising the age would increase the share of retirees with incomes below the wage-indexed poverty level in 2050 from 14.4 percent under the current system to 16.2 percent, an increase of 1.5 million people.
Under one scenario Mermin and Steuerle examined, a minimum benefit in conjunction with a higher age would minimize the new policy's effect on poverty compared with current law, raising lifetime benefits for workers in the bottom fifth of earners by 6 percent.
The Mermin-Steuerle report is one of five research briefs released today that assess the impact of raising the retirement age, ways to ameliorate its fallout for vulnerable populations, and boomers' plans to work beyond age 65.
If they retire as early as their parents, the number of workers per retiree will soon plummet, reducing the tax base and squeezing budgets for Social Security and all other government programs.
The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation.
Posted on February 1, 2007 04:24 AM
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