(Dow Jones) The time has come for the nation to face some facts and, according to Republican Rep. John Boehner, the House minority leader, that means fixing Social Security by hiking the normal retirement age to 70 for future retirees, from the current 67.
Boehner wants to increase the retirement age to 70 for people who have at least 20 years until retirement, plus tie cost-of-living increases to wages rather than the consumer price index, and limit payments so they only go to people who need them, according to published reports. The current Social Security "normal retirement age" for those born in 1960 or later is 67.
"We need to look at the American people and explain to them that we're broke," Boehner was quoted as saying recently in The Pittsburgh Tribune-Review. "If you have substantial non-Social Security income while you're retired, why are we paying you at a time when we're broke? We just need to be honest with people."
"Boehner is taking a gutsy, and in my view, absolutely correct stance," said Olivia S. Mitchell, a professor at the Wharton School, executive director of the Pension Research Council and director of the Boettner Center for Pensions and Retirement Research.
"As Americans live longer and fewer young workers are around to tax so the government can pay retiree benefits, the system is becoming increasingly unaffordable," she said. "Revenues fell below benefit costs this year with the economic crisis, as more people retired early and fewer workers were paying in benefits. So the Social Security system urgently needs reform."
Alicia H. Munnell, director of the Boston College's Center for Retirement Research and a professor at that school's Carroll School of Management, though more circumspect, also favors the notion of raising the normal retirement age.
"It merits consideration," she said. "Because retiring later is the best way to achieve a secure retirement. It all makes sense to work longer."
Working longer has many benefits: It increases the amount of money people can save for retirement, reduces the amount of money people need for retirement, and helps save Social Security, Munnell said.
But while Boehner's remedy might be gutsy, it still falls short of what could be and should be done, according to Mitchell and Munnell. Here are their ideas for other ways to help fix the Social Security shortfall.
Index Retirement Age To Life Expectancy