NU Online News Service

The American Academy of Actuaries today said the United Statesshould strengthen the Social Security old age pension system byincreasing the normal retirement age.

Raising the normal U.S. retirement age to 70 could cut theprojected Social Security program deficit in half, the AAA,Washington, argues in new position statement.

"As life expectancy increases, the percentage of workers' livesspent in retirement continues to grow, while the number of workingyears stays relatively constant," the AAA, Washington, says in theposition statement. "Inevitably, Social Security's costs willexceed what its scheduled financing will support.... While SocialSecurity's financial soundness could be restored in many differentways, we believe that any solution package should include increasesin the retirement age."

Simply speeding up an ongoing effort that is increasing thenormal retirement age for Social Security to 67, from 65, one monthat a time could cut the projected program deficit 10%, according toAAA projections.

Keeping the current schedule of normal retirement age increasesto age 67 - and then continuing to increase the normal retirementage by 2 months every year until it reaches age 70 - could cut theprojected deficit 50%, the AAA estimates.

The AAA contends that the demographic problems facing SocialSecurity appear to be permanent, not simply a temporary effect ofthe aging of the baby boomers.

"Long after all the baby boomers living have departed, SocialSecurity's income will cover only about three-fourths of its cost,"the AAA says.

The AAA attributes much of the increase to increases inlongevity.

The average life expectancy for a 65-year-old man, for example,increased to 16.7 years in 2007, from 11.9 years in 1949, andSocial Security program actuaries estimate average life expectancyfor 65-year-old men will be 18.8 years in 2040, the AAA says.

For women, average life expectancy at age 65 has increased to19.2 years in 2007, from 13.4 years in 1940, and could increase to20.9 years by 2040.

The AAA represents about 16,000 U.S. actuaries in efforts togive government officials and other policymakers actuarialadvice.

In the past, many labor groups and groups representing olderAmericans have criticized efforts to strengthen Social Securityprogram finances by increasing the normal retirement age.

In the real world, older American workers tend to have troublegetting jobs because of employer discrimination, difficulties withmaintaining up-to-date job skills, and employers' concerns aboutthe possibility that older workers might file more health insuranceclaims, increase critics argue.

Richard Johnson, a researcher with the Urban Institute,Washington, noted earlier this year at a future workforce forumorganized by the AARP, Washington, that the average annual healthinsurance claim cost is more than $3,000 per year for workers ages55 and older, and less than $2,000 per year for workers ages 25 to44.