Social Security
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In just 10 years, the first wave of baby boomers will reach age 62 and become eligible for early Social Security retirement benefits. If their behavior follows the pattern of workers who turned 62 during the past quarter century, many of them will claim permanently reduced benefits at that age, or shortly after, rather than waiting until they are eligible for full benefits a few years later.
Because of the aging of the baby-boom generation and projected gains in life expectancy, the number of Social Security beneficiaries is expected to increase much faster than the number of workers paying Social Security taxes. The programs trustees project that total spending (in 1998) dollars will more than double by 2023 under the current benefit structure. By then, however, the revenues earmarked for Social Security spending will be sufficient to pay only three-quarters of the programs expected costs. That projected shortfall Ð- together with pressure on the federal budget from increased spending on health programs for the elderly Ð- could ultimately result in budget deficits that could threaten the nations economic prosperity.
Both the Congress and the Administration will most likely try to resolve these problems well before the baby boomers begin drawing benefits. One approach that is often advocated for addressing the Social Security shortfall is “raising the retirement age.” That phrase can have two different meanings. It is often used to describe a policy that would raise the age at which workers become eligible for full retirement benefits, the “normal retirement age.” That age is already scheduled to increase from 65 to 67 by 2022. Some proposals would speed up that transition and then further increase the age to keep pace with future gains in life expectancy. Workers could still begin drawing Social Security benefits at 62 or any later age, but they would get less than they would under current law.
Raising