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In this week’s chart, Mercatus Center Senior Research Fellow Veronique de Rugy considers the fiscal and economic effects of raising the ages of eligibility for Medicare and Social Security (SS). A recent report by the Congressional Budget Office (CBO) estimates the reductions to federal spending that result from revising the Medicare eligibility age (MEA), SS earliest eligibility age (EEA), and SS normal retirement age (NRA). This chart uses data from the Committee for a Responsible Federal Budget (CRFB) that uses CBO’s recent estimates to calculate out to 2060 the effects on U.S. public debt of raising eligibility ages.

Thechart plots U.S. public debt under three scenarios (expressed as a percentage of GDP). The blue line plots the baseline debt under current law; the red line plots debt with budgetary savings from simultaneously raising all three eligibility ages; and the green line plots the debt with budgetary savings and potential economic effects (further explained below) together. 

The current age of eligibility for Medicare benefits is 65. This chart looks at the impact of gradually raising the age of eligibility for Medicare to 67 by 2025. CBO estimates, that this option would reduce federal spending by about $148 billion over ten years, and reduce the deficit by $113 billion.These savings account for the net effect of changes in federal spending on Medicaid, exchanges, federal retirees, and SS retirement. Unlike Medicare, with its single eligibility age, SS allows workers to receive a reduced retirement benefit as early as age 62. R