Policymakers should increase the retirement age to help ensure the financial soundness of the Social Security system, the American Academy of Actuaries recommended in an August policy statement.

While raising the retirement age is just one of several available options to fix Social Security, it is the one that tops the academy’s list. The group urged lawmakers to act immediately to increase the retirement age, which is 67 for all workers born after 1959. An immediate increase in the retirement age will lessen the pain of future reforms, the actuaries said.

“Regardless of the kinds of changes ultimately enacted into law, the sooner policymakers act, the more options they will have. Tax increases could be phased in more gradually, and reductions in benefit growth could be spread across a much larger population of beneficiaries, making individual reductions relatively smaller and less painful,” the academy said in its statement. “The American Academy of Actuaries believes that delay will only make the changes ultimately needed to restore Social Security’s financial soundness less attractive, more painful and more precipitous.”

Reserves will be exhausted in 2041

According to the latest estimates the Social Security trustees, the program’s cash flow is projected to move into the red in 2017 and its reserves will be exhausted in 2041 (see the story above). This imbalance is partially attributable to increased longevity, the academy said. In 1940, 65-year-old males lived on average 11.9 additional years and 65-year-old females lived on average 13.4 additional years. By 2040, life expectancy at age 65 could increase even further —with males living on average 18.8 more years and females living 20.9 additional years.

“The program is facing a demographic problem that demands a demographic solution,” remarked Tom Terry, the academy’s vice president for pension issues.