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By STEPHEN OHLEMACHER, Associated Press Stephen Ohlemacher, Associated Press
Thu Nov 18, 6:39 pm ET
WASHINGTON Raising the retirement age for Social Security would
disproportionately hurt low-income workers and minorities, and increase
disability claims by older people unable to work, government auditors told
Congress.
The projected spike in disability claims could harm Social Security's finances
because disability benefits typically are higher than early retirement
payments, the Government Accountability Office concluded.
The report, obtained by The Associated Press ahead of its scheduled release
Friday, provides fodder for those opposed to raising the eligibility age for
benefits, as proposed by the leaders of President Barack Obama's deficit
commission.
"There's more to consider than simply how much money the program would save by
raising the retirement age," said Sen. Herb Kohl, D-Wis., chairman of the
Senate Special Committee on Aging. The report shows an unequal effect on
certain groups of people, he said Thursday, and many of them "would have little
choice but to turn to the broken disability program."
Under current law, people can start drawing reduced, early retirement benefits
from Social Security at age 62. Full benefits are available at 66, a threshold
gradually increasing to 67 for people who were born in 1960 or later.
The deficit commission's leaders, Democrat Erskine Bowles and Republican Alan
Simpson, last week proposed a gradual increase in the full retirement age, to
69 in about 2075. The early retirement age would go to 64 the same year.
Under their plan, the new thresholds wouldn't be fully phased in until today's
4-year-olds are ready to retire.
AARP criticized the recommendations and House Speaker Nancy Pelosi, D-Calif.,
called them "unacceptable." Experts, however, warn that Social Security is on a
financially unsustainable path that will worsen as people live longer and
collect more benefits.
For many workers, reducing early retirement payments or delaying eligibility
would provide an incentive to put off retiring, resulting in more earnings and
potentially more savings for later in life, according to the watchdog agency's
report.
But it "could create a financial hardship for those who cannot continue to work
because of poor health or demanding workplace conditions," the report said.
The report, requested by Kohl's committee, draws on research by outside groups
as well as interviews with Social Security officials and data from the Social
Security Administration. Researchers also analyzed data from the Health and
Retirement Study, a continuing study of older Americans by the University of
Michigan's Institute for Social Research.
About one-fourth of workers age 60 and 61 just under the early retirement age
reported a health condition that limited their ability to work. Among those
older workers, blacks and Hispanics were much more likely to report fair or
poor health than whites, according to the report.
Less healthy older workers had lower incomes, less accumulated wealth and were
much less likely to have attended college.
"Some people just can't continue to work beyond age 62 for either health
reasons or they're just not able to find jobs," said David Certner, legislative
policy director for AARP. "Just because we tell people they should work longer
doesn't mean that there are employers out there willing to hire people."
Workers older than 55 are less likely than younger workers to lose their jobs,
the report said. But when older workers get laid off, they are less likely to
find other employment.
Nearly 54 million retirees, disabled workers, surviving spouses and children
now get Social Security. Payments for retired workers average $1,020 a month;
disability benefits average $929 a month. In 75 years, 122 million people, or
one-fourth of the population, will be drawing benefits.
On its current path, Social Security is projected to run out of money by 2037,
largely because of aging baby boomers reaching retirement. The longer action is
delayed, the harder it will get to shore up the program.
The GAO report says that raising the age when workers qualify for full benefits
would save money. But raising the age when workers can get early benefits would
hurt the program's finances because of the expected increase in disability
claims.
The plan from Bowles and Simpson promotes shared sacrifice: High-income workers
would pay more in payroll taxes to support the system; current retirees would
get smaller annual increases in benefits; future retirees have to wait longer
to qualify for full benefits.
"We put a hardship exemption in there for people who have, what people are
always talking about, backbreaking jobs, people that really need to retire at
62," Bowles said. "We think it is balanced."