Age is Not the Only Number for Social Security

Stuart Butler / July 27, 2010

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Last week, Henry Aaron argued in this space that raising the retirement age to help Social Security’s solvency amounted to a cloaked benefit cut. He said it’s also unlikely to be much help in reducing the deficit. The way he frames the challenges facing the budget pretty much assure that conclusion. But there are other ways of looking at the impact of raising the retirement age, and more structural – dare I say “progressive” – ways of reforming Social Security in the context of alleviating the long-term deficit problem.

Aaron is right that changing either the normal or the early retirement age will have little effect on the 2015 budget – unless international creditors perceive a real impact on long-term deficits and there is an interest rate effect through a reduced risk premium. But looking at 2015, or even 2020, is hardly the appropriate benchmark for evaluating solutions to a multi-decade budget problem. (more…)