Retirement's Moving Goalposts: Are We Being Shortchanged?
The Social Security Administration is about to make what they're calling a "final" change to the full retirement age (FRA) in 2026. It's not "final" in the sense of "never changing again," of course. It's "final" in the sense of, "this is the last scheduled increase under the current rules." Which, as anyone who's watched Congress for more than five minutes knows, is hardly a guarantee of anything.
The Slow-Motion Benefit Cut
The FRA, that magic number where you get your full Social Security payout, has been creeping upward since the 1983 reforms. People born between 1943 and 1954 could retire at 66 and receive full benefits. But if you were born in 1959, you have to wait until 66 and 10 months. Next year, anyone turning 66 will have to wait until 67 to claim their full Social Security.
The government spins this as "shoring up the finances" of Social Security. I see it as a slow-motion benefit cut, dressed up in actuarial jargon. It forces people to either work longer, accept a reduced benefit by claiming early, or tap into their retirement savings sooner.
Each time the FRA moves later, it's a defacto benefit cut. The fact that the FRA will remain stable – as long as lawmakers don't make changes – will make retirement planning easier, as all future retirees will know that 67 is the milestone they must reach to receive their standard benefit.
And this is the part of the report that I find genuinely puzzling. The increasing life expectancy is often used as a rationale for raising the retirement age. The average modern person is living longer. A century ago, the average life expectancy for people living in the UK was significantly lower than it is now. Figures from the Office for National Statistics revealed that the average life expectancy at birth differed from the life expectancy of someone who survived infancy and childhood due to significantly high mortality.
The average life expectancy of a century ago was:
51 years for a newborn boy
55 years for a newborn girl
From 2022 to 2023, the average life expectancies were recorded as:
87 years for a newborn boy
90 years for a newborn girl
Are the Goalposts Moving Too Fast?
The UK is considering raising its state pension age to 70 within the next five years. It is one of the only promising viable solutions to keep the entire pension system afloat. State Pension could suffer ‘dramatic’ change — It could reach 70 within 5 years.
But are these averages telling the whole story? Life expectancy gains haven't been evenly distributed. Wealthier people are living longer, while those in lower socioeconomic brackets are seeing their life expectancy stagnate or even decline. Raising the retirement age disproportionately impacts those who can least afford to work longer.
We're essentially creating a system where the wealthy can enjoy a longer retirement, subsidized by those who are forced to work until they drop.
The State Pension age must be reformed in such a way that allows people to expect to receive a pension for a set period, for example, 20 years.
What's the real goal here? Is it truly about "shoring up finances," or is it about shifting the burden of retirement onto individuals, regardless of their ability to bear it?
A System Rigged Against You?
The "stability" of the FRA at 67 is cold comfort when wages are stagnant, healthcare costs are soaring, and the social safety net is fraying. It's like being told the ship isn't sinking anymore, while the lifeboats are being quietly removed.