Am I correct in assuming the phrase "actuarially equivalent" is also assuming our esteemed politicians don't cut benefits?
Lots to think about, but I certainly dont count on anything from government besides a tax bill.
There's no guarantee of that. I used to assume it would happen. After all, fair is fair, and one shouldn't be penalized by not taking benefits at 62, right? The longer this gets kicked down the road, the less likely I see a "fair" solution coming.
There are two ways I see to make it fair:
1) Grandfather anyone 62 or older in, whether you've started taking benefits or not. If you're 61, tough luck, you get reduced benefits either way, but if you're 62 or older, you're in the old system. Perhaps they'd phase in so 61 year olds get small cuts, 60 slightly larger, and so on to 55 or whatever.
2) Reduce benefits for all, but figure out how to make them equivalent. So if they have to reduce by 25%, for those already 62 or older, you would take a 25% reduction if you had or will start benefits at 67. If you started earlier, you would take a larger than 25% reduction, because you've already received some benefits under the old payment. If you started later, or haven't yet started, you'd take less than a 25% reduction, to make your overall lifetime benefit (based on average time remaining) equivalent to someone who already got some full time benefits.
The math wouldn't be simple and I'm not going to try to figure it all out, but I'm sure it could be done. The concept is, if I'm 70, and haven't yet collected and a 25% cut comes, they would make up for the 8 years I could have been getting money before the cut, by only reducing my benefit by 20% (that's totally a guess). If I'm 75 and started at 70, I would've gotten 5 years before the cuts, so maybe they reduce my benefit by 22%. If I'm 82 or whatever the crossover point is, and started at 70, I take the full 25% cut because I'm even with someone who started at 62.
Likewise for someone taking at 62, they would take the largest cut if they are 70 and had already collected for 8 years. The cut would be reduced as they approach the breakeven point.
All people who have reached the breakeven point or beyond would take the 25% cut.
#1 seems possible to me but I'm not saying it's likely. #2 seems unlikely as few would be able to comprehend the math and be convinced that it really is fair to all.