Social Security Retirement Age Not What You Think

The effective retirement age for Social Security is now 70, according to a new research brief from the Center for Retirement Research at Boston College.

“Social Security’s Real Retirement Age Is 70” by Alicia H. Munnell says this age change is the result of increases in Social Security’s Delayed Retirement Credit, with monthly benefits reduced for earlier claiming. According to Munnell, “That credit, which was modest at first, now fully compensates for delayed claiming. As a result, lifetime benefits are roughly equal for any claiming age between 62 and 70, and the highest monthly benefits are available at 70. So in that regard, 70 has become the new 65.”

She added, “The level of monthly benefits at 70 appears appropriate given the increased deductions for Medicare premiums, the greater taxation of benefits, the declining importance of the spouses’ benefit, and the diminished sources of other retirement income. The brief aims to clarify Social Security’s current benefit structure.”

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In the brief, Munnell examines: how 70 became Social Security’s new retirement age; whether 70 is the “right” age by looking at “equivalency” to 65, the increasing dispersion in life expectancy by socioeconomic status, and actual retirement patterns; Social Security replacement rates that workers will face at different retirement ages; how with the maturation of the Delayed Retirement Credit, the “Full Retirement Age” no longer describes the benefit structure, and how further increases in this benchmark simply reduce replacement rates for everyone.

The brief also suggests:

  • Benefit levels at age 70 appear appropriate given that rising deductions for Medicare and greater benefit taxation have reduced Social Security’s net replacement rates;
  • The shift to age 70 should be feasible for many workers given increases in lifespans, health and education;
  • Vulnerable workers forced to claim early will have low benefits and will be particularly harmed by any further cuts; and
  • Policymakers need to inform those who can work that 70 is the new retirement age and devise ways to protect those who cannot work.

Munnell concludes, “People are living much longer, so keeping monthly [Social Security] benefit levels unchanged results in ever increasing costs. But constantly reducing benefit levels by increasing the Full Retirement Age is very hard on those who cannot change their retirement date. If we want to cut benefits, it makes much more sense to directly change the benefit formula.”

The full brief can be downloaded here.

Northern Trust Offers iPad Access to Passport

Northern Trust has launched a new iPad application (app) designed to provide executive-level users with performance, exposure and risk information they need.

The iPad app complements Northern Trust’s secure Passport mobile website, which is optimized for the iPhone and BlackBerry and accessible to any smartphone. On the iPad, clients can review and share portfolio data, view account exposure by country and asset category, and access the latest Northern Trust investment and research detail, including market summaries and video commentaries.

“Our institutional clients increasingly rely on mobile devices to receive the data and intelligence they need to mitigate risk and make informed investment decisions,” said Paul d’Ouville, global head of Product Management at Northern Trust.

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Information available within Northern Trust’s iPad app includes investment risk and performance measurement analyses ranging from sector and interest rate exposure to equity attribution. The application also leverages the inherent collaboration functionality within the iPad tablet.

“The Northern Trust iPad application joins our existing mobile site, desktop portal and Data Direct access methods as part of our holistic information-distribution strategy, which is focused on meeting the needs of clients across multiple delivery channels,” said Ted Grunberg, head of Passport Product Development at Northern Trust. “New features, including expanded risk and performance reporting functionality, will be developed and added to the iPad app to enrich the experience for clients regardless of their location.”

Northern Trust Passport app for the iPad is available at the Apple store online and is compatible with iOS 5.0 and later versions.

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