German experts propose raising retirement age to 73 to prevent collapse of pension system; it sits at 65 now. Is that drastic call coming to America?

Germany isn’t the only country considering this drastic move. Denmark is set to raise its retirement age to 70 by 2040 (2) while France raised its retirement age from 62 to 64 in 2023 despite public backlash. (3)

Similar proposals have been floated in the U.S., though their legitimacy is unclear. When asked in September if a retirement age hike could be on the horizon, Social Security Commissioner Frank Bisignano said “everything’s being considered.” (4) However, that comment was later withdrawn. (5)

While a higher retirement age could one day be on the horizon for millions of American workers, it’s not a silver bullet for the Social Security system’s funding challenges, and could come at a huge cost to many retirees.

Pros and cons of raising America’s retirement age

According to the Center on Budget and Policy Priorities (CBPP), proponents of raising the retirement age point to the Social Security trust fund’s imminent depletion and rising life expectancy as key reasons for the move. (6)

The underlying trust funds are on track to be depleted by late 2032, according to the Committee for a Responsible Federal Budget (7), which could result in a 24% benefit cut across the board or the equivalent of a $18,100 cut for a couple retiring at the start of 2033.

Meanwhile, life expectancy at birth has jumped from 73.7 in 1980 to 78.4 as of 2023, according to the Peterson-KFF Health System Tracker. (8)

Raising the retirement age could reduce the amount of benefits paid out from the Social Security trust fund and be more in line with increases in life expectancy.

However, opponents argue raising the retirement age is a de-facto benefit cut for all workers and is particularly negative for vulnerable workers. A retiree turning 62 in 2034 could lose a total of $100,000 in total benefit payments if the retirement age is raised to 69, according to Senator Elizabeth Warren. Similarly, the CPBB found that the average lifetime benefit cut would be nearly 20% if the retirement age is lifted to 70.

It should also be noted that America’s life expectancy is lower than most developed countries. Average life expectancy at birth, as of 2023, was roughly 4.1 years lower than the average of comparable countries, according to the Peterson-KFF Health System Tracker.

The average American male is expected to live to the age of 75.8, which means a retirement at 70 would give most men less than six golden years to enjoy benefits from a system they spent their whole careers paying into.

Low-income seniors are likely to die even younger. Older Americans who earn less than $20,000 a year pass away nine years sooner than those who earn $120,000 or more, according to a recent report (9) from the National Council on Aging (NCOA) and LeadingAge LTSS Center @ UMass Boston.

In other words, raising the retirement age could prevent many lower-income seniors from ever collecting a benefit payment.