The House subcommittee on Social Security voted yesterday to raise from 65 to 68 the age at which a person can retire with full benefits -- the first important benefits cuts ever voted in the program's 45-year history.
The proposed change eventually would save $15 billion a year, it is part of an effort to keep the system sound financially without more tax increases. As drafted by the subcommittee, it would not affect anyone now on the rolls or retiring in the next 10 years. The new retirement age would be phased in over 10 years starting in 1990.
The 6-0 subcommittee vote is only a first legislative step. Any bill must still be cleared by the full Ways and Means Committee, then both House and Senate. But it is still a landmark in the intergenerational politics that many experts foresee in the future as the population ages, and there are relatively fewer workers to support more and more retirees.
In a second major decision yesterday, the subcommittee voted to remove the earnings limitation for all beneficiaries over age 68, instead of 72 as now. This provision limits what retirees can earn without loss of benefits. At present, a person can earn up to $5,500 a year without penalty; after that, benefits are reduced $1 for each $2 earned.
Removal of the earnings limitation would add to costs of the system, but by encouraging people to keep working would presumably also add to revenues. In any case, the earnings limitation has been a controversial political issue, President Reagan pledged in the campaign to propose elimination of the earnings limit for persons 65 and over, and inclusion of this provision in the bill could help win his support.
Under present law a person who retires at 65 receives the full Social Security benefit merited by his earnings record. He can also opt to retire at 62, but his benefit is permanently reduced by 20 percent to make up for the three extra years he will be on the rolls.
Under yesterday's vote, after the year 2000 a person would not be eligible for the full benefit until age 68. He would retain the right to retire at age 62, but in that case his benefits would be reduced by 36 percent, much more than now. And if he retired at 65, he would receive only 81 percent of his full benefits instead of the 100 percent he gets now.
These provisions would presumably discourage early retirement. Seventy percent of individuals now opt to retire at 62. Social Security officials present at the subcommittee meeting said.
Subcommittee Chairman J. J. Pickle (D-Tex.) rejected the idea of wiping out the age 62 retirement option and making 65 the earliest anyone could choose to retire on Social Security. Other members agreed that the age 62 option should be kept open for those too ill, tired or enfeebled to continue working after that, and for others who cannot find jobs at that age.
But they unanimously agreed that anyone so opting should be cut more than at present. Under present law, Social Security faces an actuarial deficit of about $19 billion a year for the next 75 years measured in today's dollars. The raise in retirement age voted yesterday will eliminate about $15 billion of this deficit.
Pickle, referring to one of several versions of the age 68 retirement plan being discussed by the panel, said, "We'll take this . . . as an anchor to start working out" details of a final age-68 provision."I hope it doesn't drag your bill down," said Andrew Jacobs (D-Ind.). He, like other members, reserved the right to offer amendments on details of the age 68 proposal.
All the subcommittee members, and most members of Congress as well, are nervous and voting a major cut in benefits such as the age-68 proposal that will eventually mean lower benefits for about four fifths of all Social Security recipients.
Today there are about 35 million Social Security beneficiaries of all types but one fifth are on the disability program or are not elderly.