Lawmakers consider plan to raise Social Security’s full retirement age to 70


Maine Independent Sen. Angus King and Sen. Bill Cassidy, a Republican from Louisiana, are leading a group of lawmakers in a proposal to raise the full retirement age to around 70 years old from 67, and create a sovereign-wealth fund that would help fund Social Security, according to a media report.

Among options being considered are changing the way Social Security calculates monthly benefits to reflect the number of years spent working and paying into Social Security, rather than the existing formula that calculates benefits based on a worker’s average earnings over 35 years, according to a report by news website Semafor, citing two people briefed on the plan.

Read: Straight talk on Social Security

The potential plan also includes a proposed sovereign-wealth fund that could be funded with $1.5 trillion or more in borrowed money, according to Semafor. If the fund failed to generate an 8% return, both the maximum taxable income and the payroll tax rate would be increased to ensure Social Security stays solvent for another 75 years.

The offices of King and Cassidy declined to comment specifically on the media report.

“This is an example of two leaders trying to find a solution to a clear and foreseeable danger. Although the final framework is still taking shape, there are no cuts for Americans currently receiving Social Security benefits in our plan. Indeed, many will receive additional benefits,” Cassidy and King spokesmen said in a joint email statement to MarketWatch.

Read: Biden vows he’ll turn Republicans’ dreams for Social Security and Medicare into a nightmare

“The Social Security trust fund is going insolvent in 11 years. Senators Cassidy and King have been working on a legislative solution—which has been reported in the past. The plan is not finalized,” representatives for Cassidy and King said in the email. 

If no action is taken, the trust fund for Social Security will be unable to pay out 100% of benefits starting around 2035. Changes to the program often are referred to as the “third rail of politics” because the issue is so politically charged. 

The last major changes to bolster Social Security’s finances were made in 1983. Part of those changes included a gradual increase of the full retirement age to 67 from 65.

In a recent MarketWatch column, Alicia Munnell, director of the Center for Retirement Research at Boston College, wrote raising the full retirement age for Social Security should be seen as a benefit cut.

“At any moment, only about half of private-sector workers are covered by any type of workplace retirement plan. That means some people never are covered and are totally reliant on Social Security, while others move in and out of coverage and end up with modest balances,” Munnell wrote. “Moreover, increasing the FRA is the most pernicious form of benefit cut, because it hurts the most vulnerable who are forced to claim early.” 

President Biden recently brought Social Security into headlines when he vowed to protect Social Security and Medicare during his State of the Union address and following remarks.

Read: Social Security is finally a hot topic for Republicans and Democrats—thanks to Biden’s State of the Union speech

The potential proposal from the group led by King and Cassidy are among other options circulating Washington. A recent proposal from senators Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vermont) seeks to shore up Social Security by raising the top rate of income tax by a third, and the top rate of capital-gains tax by more than a half.

Read: Opinion: What’s behind Bernie Sanders and Elizabeth Warren’s bold tax hike to shore up Social Security?




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