Is 70 the new old?

The American Academy of Actuaries held a media briefing in which members of the academy discussed Social Security’s long-term financial soundness. Thomas Terry, vice president and chairman of the Pension Practice Council at the academy, said Social Security will go into debt in 2017 and be completely exhausted of finances in 2041 without legislation that alters the system.

Terry said baby boomers, who begin qualifying for Social Security in 2008, are only part of the problem. According to Terry, the current age of retirement is frozen at 67, an increase of two years since President Franklin Roosevelt enacted Social Security in 1935. Terry said a major way to reduce strain on Social Security is to raise the age of retirement. Terry said Americans’ life expectancy continues to rise, causing more people to claim benefits for longer periods of time.

Bruce Schobel, chairman of the Retirement Security Principles Task Force at the academy, gave statistics that show American longevity. He said in 1940, the average person outlived the age of retirement by 12 to 13 years. He countered that data with 2008 statistics in which people, on average, outlive retirement by 16-19 years. Schobel gave a hypothetical situation whic proposes that if the age of retirement is increased by two months annually until retirement reaches the age of 70, half of Social Security’s long-term deficit would be eliminated. Schobel reiterated that raising the age of retirement is not an all-inclusive solution to Social Security’s long-term finances. He did say, however, that any future legislation should include changes in the age of retirement. He also noted that this particular proposal would not affect those born prior to 1960.