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Raising Social Security retirement age would impact disability costs

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Raising Social Security retirement age would impact disability costs

While policymakers debate how to keep Social Security solvent over the long-term, a Government Accountability Office report says there could be unintended consequences by raising the earliest eligible retirement age to collect lower payments without also raising the full retirement age for collecting full payments.

Raising only the earliest eligible age for benefits, which is now 62 years old, would hurt the program's overall solvency because disability insurance costs would rise while expected retirement benefits would remain the same, the GAO said. Changes could also create a financial incentive to rely on disability insurance than to keep working until a later age.

In addition, postponing or lowering monthly benefits would create a financial hardship for workers who have medical conditions that do not qualify for disability insurance or for workers who lose their jobs, the report said. Disability rates increase with age, and low-income and minority older workers have higher disability rates. Older workers who lose their jobs have a much harder time being rehired than do younger workers.

The GAO suggests allowing for partial disability benefits, like the Veteran's Affairs program, or increasing supplemental income for older workers who fall through the cracks. "Balancing the need for retirement income security with added costs of the mitigation efforts will be challenging," the GAO concludes.

FAST FACT: The current gap between Social Security program spending and revenue is 2% of social security taxable wages. By 2037, the funds are projected to run out.

Reprinted by permission of The Center for Public Integrity.

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