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Show Increased Early Retirement Puts Heavy Strain on Social Security Social Security appears to have become largely a vehicle to facilitate early retirement, thus imposing a greatly increased strain on the system's financial structure, according to Utah Foundation, the private, nonprofit non-profit research organization. In 1960, more than 75 percent of the Social Security benefits newly granted during the year were full benefits, signifying retirement at the standard age of 65 years or later. In 1979, only 12 percent of newly-awarded benefits were for standard retirement, 88 percent for reduced benefits, indicating that retirement had been taken between bet-ween ages 62 and 65. "There have been no changes in the economy to account for the abrupt and sweeping changes in retirement patterns, pat-terns, and it appears certain that at least a significant proportion of those taking early retirement do so by choice rather than from necessity," the Foundation notes in a research brief released this week. "The financial burden imposed on the system by mass early retirement is considerable." Social Security is facing serious fiscal problems, both long-arid short-range, short-range, and a number of remedies have been proposed including such things as adjustment of cost-of-living increases, removal of some or all of the nonin-surance-related benefits from the program, and advancing the standard retirement age to 68 years. The current Utah Foundation examination confines itself largely to the question of early retirement, which has been less thoroughly discussed. Under the present law, maximum benefits for a person taking early retirement at age 62 are 80 percent of those awarded to a person retiring at 65 under comparable conditions. The person retiring at age 65 will rceive larger monthly benefits than the early retirant, but will probably take considerably con-siderably less from the system over the course of his lifetime than will the early retirant. Not until the retired person is 77 years old would the person taking normal retirement receive as much in total cumulative benefits as the person retiring at age 62. "Inasmuch as the mortality rate is high between ages 62 and 77, the current strong trend to early retirement places a significant strain on Social Security finances," the Foundation points out. "It would appear ap-pear desirable, from the point of view of Social Security's fiscal soundness, to apply stronger penalties for taking early retirement, thus building incentives in-centives for people to stay longer in the work force." It is recognized that provision must be made for those who retire early by necessity, being physically unable to continue working or unable to find employment. However, such cases might be considered as social welfare problems and handled accordingly out of the general fund, thus not imposing an additional burden on the severely-strained severely-strained payroll tax which supports the Social Security system. The Foundation notes that in the early days of Social Security and objective ob-jective secondary to the primary aim of providing a minimum retirement support was to get older people out of the work force and leave scarce jobs to younger workers. One of the major problems in Social Security's future is the decreasing numbers coming into the work force from the declining birthrates which starte din the 1960's. At the same time, the number of retired persons will be swelid by the impact of the post-war "baby boom" generation that will soon be reaching retirement age. "Just as it was important in the depression years to provide incentives for people to retire from the work force, it may be essential in future years to provide incentives for people to remain as long as possible in the work force if Social Security is to remain operative. |
