State Pension Considers Raising Retirement Age to 67; What About Cutting Early Retirement?

Here’s another way to address the teacher shortage: don’t let them retire until they turn 67!

Bob Mercer reports that the South Dakota Retirement System is considering raising the retirement age to 67 for most public employees and 57 for public safety workers. Any change would have to go through the Legislature.

The reason for the change is simple: we’re living longer. More years of retirement cost more money. If we want SDRS to cover our groceries and RV gas, we need to work longer. Additionally, while SDRS assets grew last year to $10.8 billion, the return was only 4.5%. State investment chief Matt Clark says the “good times have run out of gas,” so we’re going to have less revenue for more retirees.

But perhaps before requiring South Dakota’s public servants to work past age 65, our state pension system should consider the wisdom of letting people retire at 55. Early retirement is an enticing perk, but those early takers get lower monthly benefits, but over time, they draw more than members who retire at the traditional age. Early retirement also introduces uncertainty into the system’s planning: one can’t be sure how many members will take early retirement each year. If SDRS set 65 as the age for everyone to get benefits, it would have a much more predictable draw-down rate.

One way or the other, SDRS needs to throttle payments to sustain its pot of gold. Which cut is better: requiring some folks to work past 67, or requiring everyone to work to 65?

9 Responses to State Pension Considers Raising Retirement Age to 67; What About Cutting Early Retirement?

  1. Deb Geelsdottir

    67, with no early retirement.

  2. When we established the South Dakota Retirement System it was assumed that it would coexist with Social Security. As the need to increase retirement age for Social Security so it must also require SDRS to increase retirement age.

    The concept of early retirement has been abused for forty years. Remember the retire-rehire and that got so bad the Legislature had to reign in the huge increases that resulted from the retire-rehire.

    The whole concept of early retirement has been abused and it should never have been started and now is the time to eliminate it completely!

  3. Nick Nemec

    How about allowing early retirement but no benefits until age 65?

  4. Douglas Wiken

    Some, perhaps small number, deserve early retirement because of serious health problems.

  5. mike from iowa

    I don’t think SS retirement age would need to be raised if wingnuts had the guts to tax all income on their korporate buddies,not just the first 117K. It would at least go along ways toward fixing the problem.

  6. Deb Geelsdottir

    Mike is absolutely right about that. How about taxing everyone at 75% of their gross income?

  7. Deb Geelsdottir

    Just to be clear, I do not mean a tax rate of 75%. Don’t change the tax rate. Change the amount of income that is taxed.

  8. SuperSweet

    Pop the cap, as it is known.

  9. do firemen/women have a reputation for outside jobs in addition to full time professional employment with full benefits, and then early retirement too, as public safety employees or for other reasons?