There has been talk about raising the full retirement age to collect Social Security benefits as a way to stabilize the Social Security trust funds so that people will continue to receive their benefits uninterrupted in the future. The question remains if this is a good idea.
We have previously reported that beginning in 2034, if the current system is still in place, there will not be enough money to honor 100 percent of benefit commitments. One of the ideas of extending the life of the trust funds is to increase the retirement age. Currently, everyone born in 1960 and beyond reaches the full retirement age at 67. The problem with this solution is that most Americans don’t wait until full retirement age to collect benefits. According to a story published by USA Today, 57 percent of people collect early. Retirement benefits are payable as early as 62. Less than 8 percent of beneficiaries wait longer than the full retirement age to collect benefits to maximize their payments. A person can wait until age 70 to collect benefits when they would receive their maximum monthly benefit. Those who wait until age 70 to collect benefits receive an increase of monthly benefits of more than 75 percent as compared to people who decide to collect at age 62.
So, if the full retirement age were increased, would it really solve Social Security’s funding problem if most people don’t even wait until full retirement age to collect benefits? It is not necessarily that people don’t understand that if they wait they can increase benefits, it is more of a needs-based decision that people collect benefits early because they need it to survive. Increasing the retirement age will not solve Social Security’s funding issues alone, other measures would need to be adopted for a long-term solution.
