Presidential candidate Nikki Haley proposed raising the full retirement age for future Social Security recipients during a town hall meeting in Iowa — a controversial proposal given its potential impact on benefits.
“You’re reforming entitlements, but you’re doing it in a way that you’re not taking anything away from seniors or people getting ready to retire,” she said at the meeting, seen in a video by local news site The Daily Nonpareil . “You focus on the new generation. You focus on what’s next.”
Haley did not say what age the full retirement age, also known as FRA, should be or when the government would enact that change.
Raising the full retirement age is a controversial issue, with some critics calling it a benefit cut. People who can’t change the age they need to retire will see less benefit from the adjustment, as will people who decide to delay their retirement age, argued Alicia Munnell, director of the Center for Retirement Research at Boston College. “Currently, those who claim at age 62 receive only 70% of the benefit available at 67,” she wrote in a MarketWatch column. “If the full retirement age were increased to 70, that amount would drop to 55%.”
Social Security’s full retirement age has not been changed since 1983, when the law attempted to gradually raise the retirement age for people from 65 to 67. Age 65 was the original full retirement age for beneficiaries, set when Social Security was created in 1935.
As it stands now, everyone born in 1937 or earlier has a full retirement age of 65, and that FRA increases two months each year after until 1943. Between 1943 and 1954, the full retirement age is 66. For everyone born in 1960 or later, the full retirement age is 67. Individuals can begin claiming benefits at age 62, although any time before full retirement age will result in a permanent reduction in benefits. (Comparatively, delaying Social Security benefits until age 70 will also increase a recipient’s check.)
See: Are mental competence tests for older politicians ageist?
The notion of changing the FRA for younger generations isn’t entirely unheard of — that’s what happened during the 1983 reform that raised the age from 65 to 67, Stephen Goss, Social Security’s chief actuary, told MarketWatch. The law was passed in 1983, but the change didn’t take effect until those who turned 62 in 2000. Goss also said that raising the full retirement age won’t solve Social Security’s insolvency problems (the two trust funds that support Social Security are expected to be exhausted by 2035, at which point recipients will experience a 20% reduction. The increased FRA would be consistent with longer life expectancy, he said.
Haley also proposed limiting benefits for wealthy Americans. “A lot of them will tell you they don’t even want it,” she said. The former South Carolina governor said the cost-of-living adjustment should also be tied to inflation, “something Republicans and Democrats agree on,” she said. “We can handle that.”
Haley did not specify what type of inflation benefits would be tied to — they are currently tied to the CPI for urban workers, though lawmakers have proposed switching to the CPI for the elderly, which measures the “basket” of goods and services older Americans spend on.
In her speech, Haley said Medicare should be expanded in the form of Medicare Advantage to promote more competition and choice.