America's rapidly aging society is placing financial strain on its two core old-age programs, Social Security and Medicare. Now, as Republicans are close toin the midterm elections, some lawmakers are embracing plans for overhauling the programs — including raising the age for seniors to claim benefits to 70 years old.
Under a plan developed by the Republican Study Committee, a group of conservatives in the House, senior citizens would face a five-year delay to claim Medicare, the government health care program for seniors that currently allows people to access the program when they turn 65. And the retirement age for Social Security would also increase to 70, compared with today's full retirement age of between 66 and 67 years old.
The reason for the push? The "miracle" of longer life expectancies, according to the Republican Study Committee's documents. But while Americans are living longer than in earlier generations, the average age of retirement is 61 — or 5 years earlier than workers say they had expected to step back from the workforce, according to Gallup. In other words, people may believe they'll work longer, but on average, Americans are stepping back five to six years before they even reach Social Security's current full retirement age.
Because of this, boosting the age to claim benefits would likely increase hardship and poverty for older Americans, especially for low-income, rural Americans and those who have to stop working due to health issues or to take care of family members, experts say.
That means either missing three years of benefits compared with current retirees, or opting to claim benefits earlier — which Social Security allows retirees to do — in exchange for a permanent reduction in benefits. Generally, retiring three years earlier than the full retirement age equates to a 20% decline in monthly benefits, according to the Social Security Administration.
"That means that for even those people who work to age 70, you never catch up with the cut in benefits," said Nancy Altman, the president of Social Security Works, an advocacy group for the benefit program.
She added, "It particularly hurts those in low-income, physically demanding jobs" who are more likely to stop working earlier due to health issues.
Postponing eligibility for Medicare "would leave most older Americans age 65 -70 significantly underinsured and threatens their finances and their health," said Mary Johnson, Social Security and Medicare policy analyst, at The Senior Citizens League, an advocacy group for older Americans.
Americans between 65 to 70 years of age would either need to work longer in order to keep their health coverage through their employers, or turn to Healthcare.gov's marketplace to buy insurance, she noted. Even plans for people who are under 64 can be costly, running more than $10,000 per year in premiums.
"The cost for those 65 to 70 would be even more financially challenging, especially given the fact of the need to use more care and spend more out of pocket," she noted. "Where will they find the money to pay those new unexpected healthcare costs?"
Republicans say that changes are needed to Social Security and Medicare because of projected funding shortfalls, with Social Security's trust fund projected to be depleted by 2035. At that point, beneficiaries would still receive monthly checks, but the benefits would be cut to about 75% to 80% of their full amount. Medicare is also facing funding shortfalls as the ranks of America's seniors swell.
According to the Republican view, the best way to reset the program would be to cut spending by reducing the number of years that seniors can claim these programs. They also want to link retirement age to future changes in life expectancy, which could mean that the age for claiming Social Security could creep even higher than 70.
"Most people don't even work to their full retirement age, much less 70," Altman said. "This would add to insecurity and it would add to the retirement income crisis."
If Republicans gain control of Congress, it's likely that these proposals and others, such as turning Social Security into a discretionary spending program, could move forward, experts say. As of Wednesday morning, it waswhich party will maintain control of the Senate, although Republicans to win the House.
President Biden is pushing against the proposals, but Democrats are facing headwinds as votersin 40 years and other economic issues.
"From the time you're 16, you have money taken out to pay for Social Security," Biden said at a recent November event. "But guess what? There's somebody out there busting their neck, or you just lost your husband or your wife, you're 66, 68 years old, and they want to take away your Medicare and your Social Security."
Red-state life expectancy
Americans living in Republican-leaning states are likely to be hurt more by the retirement age increase than those in so-called blue states, experts said.
That's because, depending on one's state of residence, there's a considerable gap in life expectancies for people who are 65 years old. Residents of states where voters tend to predominantly elect Republicans tend to have lower life expectancies at age 65 than people who live in states where residents vote for Democrats.
For instance, Mississippi, Alabama and Oklahoma have the lowest life expectancies in the nation for people who are 65 years old, with those residents projected to live roughly an additional 16 years, according to government data. But 65-year-olds in Hawaii live an additional 21 years, on average, while those in California and Vermont live an additional 19.5 years.
Raising the retirement age "would really hurt rural areas, which tend to trend older and be lower income, and they tend to be Republican voters," Altman said.
Pushing Medicare's eligibility age to 70 would also hurt many of these voters, especially as low-income workers may not be able to remain in the workforce in their 60s due to disabilities or other issues, and could struggle to pay for health insurance until they turn 70, she added.
In the long run, delaying Medicare accessibility could also raise the program's health care costs because more people would be entering the program not only at an older age but potentially sicker after delaying health care treatments for several years, Altman said.
Other fixes for Social Security
There are other options for restoring Social Security and Medicare to financial health other than raising the retirement age and cutting benefits, experts say.
Among them is raising the cap on earnings that are taxed for Social Security. Currently, earnings over $147,000 aren't subject to the payroll tax (althoughto $160,200 in 2023). Another idea is to increase the tax rate for the program.
Both methods would bolster revenue for the program, although the first idea would only impact about 6% of workers who earn above $147,000 annually, while the second would impact all workers, the Congressional Research Service said in a June report. (In 2023, the cap on earnings will rise to $160,200, with the amount adjusted upward due to inflation.)
"From a political perspective, public opinion regarding different options can vary among constituencies," the CRS report noted.
But, the report added, policymakers need to act soon to avoid a cut in benefits to the roughly 70 million people who receive Social Security benefits — a group that includes retirees, disabled workers and survivors of Social Security recipients.
Yet raising the retirement age and putting Medicare out of reach until people turn 70 may only exacerbate income inequality and worsen poverty among America's seniors, Altman noted.
"This is an incredibly serious threat right now," she noted.
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