Denmark will be increasing its retirement age to 70 by 2040. Now, energy and transportation experts are looking to see if the United States will follow suit. The big question are the implications of such a change—for Social Security, and for the economic landscape. The U.S. never established a formal retirement age. This uncertainty begs the question of how the system would be able to adapt to a potentially higher retirement age.
In the U.S., you can begin collecting full Social Security benefits at age 66 or 67. Your specific eligibility will be determined by your birthdate. Congress set this age themselves by enacting a law in 1983. The law phased in an increase in the full retirement age from 65 to 67. People born in 1960 or later will be subject to the increased retirement age of 67. This is a huge step away from that policy. Even this is less severe than Denmark’s policy, which has raised its retirement age since 2006 in response to longer life expectancy.
By 2025, Danes will become eligible for public pensions at age 67. The eligibility age will be phased up to 70 by 2040. This shift signifies a broader trend among nations adjusting their retirement policies to accommodate longer life spans and changing workforce dynamics.
A proposal scored by the Social Security Administration’s actuaries suggested that raising the full retirement age to 70 could eliminate 26% of the program’s projected shortfall over the next 75 years. In addition, this fix would save the program almost $400 billion in savings over the life of the program. The recently introduced Social Security Fairness Act would increase that cost by $200 billion over the next 10 years. This policy shift further darkens the fiscal forecast for Social Security.
In fact, more than 90% of Americans would benefit from waiting to start their Social Security benefits until age 70. The reality is that few do; in fact, shockingly, just 10% do so. This gap is troubling in terms of both public knowledge of the issue and the general financial literacy related to retirement planning. Andrew Biggs, a former deputy commissioner of the Social Security Administration, emphasized the urgency of these discussions: “They’re going to need the money right now.” Too many Americans are unable to save adequately for retirement. Yet as a consequence, they’re frequently left no choice but to rely on Social Security to survive.
Rangvid further noted that “There’s nothing that prevents you from retiring earlier if you have the funds and the means to do so.” A larger share now finds that people deserve more flexibility in their retirement decisions. This conviction exists regardless of any legislative directives.
As these plans circulate on the Hill among Republican lawmakers pushing for an increase in the retirement age, Americans still aren’t buying it. More than half of Americans are concerned about whether they will be financially prepared for retirement. They wonder if they will have the opportunity to work into their old age.