Tuesday, January 10, 2012

CBO Brief on Raising Social Security/Medicare

The Congressional Budget Office has released a new report on the impact of increasing the Social Security and Medicare retirement ages:

Raising the ages at which people can collect Medicare and Social Security would reduce federal spending and increase federal revenues by inducing some people to work longer. However, raising the eligibility ages for those programs also would reduce people's lifetime Social Security benefits and cause many of the people who would otherwise have enrolled in Medicare to face higher premiums for health insurance, higher out-of-pocket costs for health care, or both. This issue brief reviews how ages of eligibility affect beneficiaries under current law and how delaying eligibility would affect beneficiaries, the federal budget, and the economy.

It’s an interesting piece in that it not only looks at the impact for beneficiaries and the program’s finances, but also considers how longer work lives encouraged by higher retirement ages could affect the budget – through higher taxes paid – and the economy as a whole.

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