Impact of Raising Social Security Early Retirement Age

Raising the retirement age for publicly-funded pensions has become an important part of the global discussion about how to deal with weak economies and looming budget deficits. It has also sparked political discord and riots, most recently in France. In his latest Retirement Policy Outlook, AEI economist Andrew Biggs, a former principal deputy commissioner of the Social Security Administration, finds that raising the Social Security early retirement age from 62 to 65 in the United States would:

  • Prolong the Social Security trust fund by around five years--from 2037 to 2042--a modest effect on Social Security's finances

  • Significantly increase (by about 16 percent or $7,500 per year) both Social Security benefits and private pensions once individuals did retire

  • Boost GDP by around 5 percent, adding billions to the economy and tax revenues

  • Improve the federal budget over ten years by around six times more than the recently passed health reform legislation

AEI resident scholar Andrew Biggs can be reached for interview at [email protected] (202.862.5852) or through his assistant at [email protected] (202.862.5852). For additional media inquiries, please contact Hampton Foushee at [email protected] (202.862.5806).

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