Retirement Years Have Expanded. Now What?

"The expansion of retirement years has been one of the most profound societal changes of the past eight decades in the United States," write Eugene Steurerle and Damir Cosic of the Urban Institute. This expansion is straining the Social Security system's finances.

Since the Social Security program first began to pay benefits in 1940, the length of retirement (i.e., receipt of Social Security benefits) has expanded by more than a decade due to rising life expectancy and early claiming. If men and women today were to collect Social Security benefits for the same number of years as their counterparts in 1940, they would have to delay claiming their benefits until age 74 (men) or 75 (women). Instead, the average age of Social Security claiming is 64, with many claiming as early as age 62.

Although Social Security's full retirement age is rising from 65 to 67, the earliest age allowed for Social Security claiming (62) remains the same. The consequence is this: a woman retiring at age 62 in 2022 will receive Social Security benefits for 29 percent of her life and 58 percent of her adulthood. Such lengthy retirements are not financially sustainable.

"Reform must address the unavoidable question posed in the title of this brief," conclude the authors. How should Social Security adjust when people live longer?

Source: Urban Institute, How Should Social Security Adjust When People Live Longer?