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Compliance November 22, 2010
GAO Warns Lawmakers about Retirement Age Increases
Government auditors warned Congress that boosting the Social
Security retirement age would harm poor and minority Americans as
well as raise disability claims from older disabled people who can’t
work.
Reported by Fred Schneyer
The Associated Press reported that the Government Accountability Office (GAO) claimed that the projected disability claim spike could hurt the Social Security system because disability payments are typically higher than early retirement payouts.
“There’s more to consider than simply how much money the program would save by raising the retirement age,” Senator Herb Kohl of Wisconsin, a Democrat and chairman of the Senate Special Committee on Aging, declared, according to the news account. The GAO report shows an unequal effect on certain groups, Kohl said , and many “would have little choice but to turn to the broken disability program.”
Under current law, people can start drawing reduced early retirement benefits from Social Security at age 62, though full benefits are available at 66, a threshold gradually increasing to 67 for people born in 1960 or later. The 2010 report from the Social Security Board of Trustees projects that the trust funds’ assets will be exhausted by 2037.
For many workers, reducing early-retirement payments or delaying eligibility would provide an incentive to put off retiring, resulting in more earnings and potentially more savings, the report said, but “could create a financial hardship for those who can’t work.”
“Changes in the retirement age could conceivably improve retirement security for able-bodied workers if they cause them to work longer and save more for retirement, but it could worsen security for those unable to do so,” GAO researchers asserted in their report.
The GAO report is at http://www.gao.gov/new.items/d11125.pdf.