Wednesday, June 15, 2005

Waiting Until 69 to Retire

Senators are reportedly considering raising the retirement age to 69. Currently, Americans are eligible for Social Security at the age of 65, with that number set to rise to 67 for those born in 1960 and later.

Raising the eligibility age for Social Security really should be part of any commonsense solution. In 1940, the average life expectancy was under 64 years while right now it’s around 77 years. Even more importantly, in 1940, those who reached 65 years of age could be expected to live another 13 years. Now that number is nearly 18 years.

The longer we live, the more Social Security has to pay out. But if we’re living longer, shouldn’t we be able to work longer? After all, most of us now do work that isn’t labor intensive and which we can continue to do even with diminished physical capability. For those who perform strenuous work which they may be incapable of performing by their mid-sixties, surely Social Security’s disability provision could be used until they reach retirement age.

Privatization arguments aside, raising the retirement age would be an incredibly fair and effective way to begin solving the problems with Social Security. It’s not a stand-alone solution, but it should be part of any reform package.

11 Comments:

At 8:20 AM, Blogger Jonathan C said...

Alan, spot on. I've long argued that raising the retirement age should be a part of any responsible social security fix.

After all, we're living longer lives, as you pointed out. Not only that, we're living healthier lives. Today's 70 year old is much more capable of working a full-time job than a 65 year old was in the forties! If 40 is the new 30, then 75 is the new 65.

It makes perfect sense to me that a program so under-funded needs to have a multi-faceted approach to reform. With a combination of raising the retirement age and raising the cap on social security wages, we may just be able to bring SS back to the PAYGO system FDR envisioned.

P.S. Sorry about the Spurs, but I gotta root for the East!

 
At 10:05 AM, Blogger Tom - doubts and all said...

Yeah, what Jonathan said.

I think the reasoning you use for raising the retirement age is sound. The same logic applies to the payroll cap. The 90k is not worth what it used to be so raising it proportionately is no less fair than raising the retirement age.

 
At 10:17 AM, Blogger Heiuan said...

Raising the retirement age is a good idea, for the most part. The only problem I see is that there are people in tremendously physical jobs who won't be able to continue in them until 70 or 75. Many of them barely make it to 65.

Just because a person is no longer able to be a heavy construction worker or a farmer doesn't mean he or she is disabled.

As it stands now, these people won't qualify for standard disability payments because they aren't disabled. They are simply unable to complete a physically demanding job any longer.

So, what to do with these folks needs to be seriously looked at and some way to fix the system for them as well.

Did that make any sense? Sheesh...NyQuil does a number on my brain.

 
At 11:47 AM, Blogger Shay said...

Oh, great. So make it even harder for the average black male to collect Social Security. 1 in 3 already dies before 65, so pushing it up to 69 will probably push it up to 1 in 2. This is a major reason why I support privatization, because it would enable our communities to gain wealth and pass the funds to heirs. Individuals, not the government, should control our retirement dollars.

 
At 12:10 PM, Blogger Alan Stewart Carl said...

Molotov--that's a good reason to support some type of privitization (which I do, btw). However, and you'd know better than I, but I understand that the lower life expectancy among black Americans is due to infant mortality and youthful death skewing the numbers. I have heard (and again, I could be wrong) that the average black American who makes it to 65 has about the same life expectancy as does anyone else.

That said, raising the age would take effect far down the road and, in that time, I would hope we all can find a way to solve the life expectancy gap.

 
At 1:01 PM, Anonymous Anonymous said...

I personally don't give hoot about raising the age - I reached retirement 12 tears ago . . . but:

Raising the cap should be done before anything is done with this Ponzi Scheme of "privitization' being currently foisted on the public.

Here's a small snip from an article I think everyone should read and fully digest -- even if it gives you an uncomfortable case of indigestion. At my age I've gotten use to that.

---snippet---

> They wanted something for nothing.
> I gave them nothing for something.
> —J. R. “Yellow Kid” Weil

---snip---

> The one sure mark of a con, though, is the promise of
> free money. In fact, the only way the stock market is
> going to grow is if we the people put a lot more of our
> money into it. What Bush seeks to manufacture is a
> boom—or, more accurately, a bubble—bankrolled
> by the last safe pile of cash in America today. His plan
> is a Ponzi scheme, and in that scheme it is Social
> Security that is being played for the last sucker.

From" The $4.7 Trillion Pyramid

Happy reading -

Signed: Old and In the Way

 
At 1:32 PM, Blogger Alan Stewart Carl said...

Dear old and in the way:

This is just an aside, but I often hear the current system referred to as a Ponzi Scheme--the argument being that I'm paying in now on the hope that by the time I retire I get the money from other people who are paying in. Getting to retirement is like getting to the top of the pyramid.

I think some people in their 20s and 30s are worried that, but the time they get to the top of the Social Security pyramid, there won't be anyone left paying in. So the idea of private accounts is appealing because at least, if nothing else, we get at least as much as we put in (barring a huge crash).

Anyway, that's just an aside--not a well thought-out argument.

 
At 4:18 PM, Anonymous Anonymous said...

Thanks for the quick reply Alan.

When placed next to a "defined-benefit program" or "defined-retirement account" in which employees or investors are guaranteed a specific retirement payment - the so-called "privatization plan" does resemble a Ponzi scheme - in so far as profits for the "privatization plan" would be paid for by the promise of future stock-market gains.

I hope this clears up what I meant by Ponzi scheme.

Old and In the Way

 
At 4:42 PM, Blogger Alan Stewart Carl said...

Old and in the way,

Kinda scary that the whole stock market opperates on the assumption that, over time, there will always be more money flowing in. Guess that's what they mean by having faith in the market.

 
At 12:48 AM, Anonymous Anonymous said...

Frankly, I would rather have seen real numbers before any of this was brought to public discussion.

When the original report was released, there were glaring errors in calculation used to support the "insolvency" contention. Among those glaring errors:

Women in the workplace vs women collecting only on the spouse's record. (The historic figures of women currently receiving SS and prior generations rather than a projection of most women contributing during their lifetime was used. Obviously, this substantially underestimates overall contributions into the system as well as the increased earnings of the substantially higher numbers of women with professional careers and advanced degrees.)

No one ever dies. (According to the projections, everyone collecting now and henceforth doesn't STOP collecting. This particular error seemed rather odd in the face of making minority life span statistics an issue, I mean, according to the report, no one dies, so how could minority status have any impact at all?)

Minority life span statistics. (One has to remember all of the data used is HISTORIC, not current,as a result, historic lows are factored in rather than current estimates carried forward, i.e., instead of say, looking at a .005% increase in life expectancy over the last 2 decades and projecting that forward, an average of the last two decades was used. *The example given uses a fictional percentage for illustrative purposes*)

It would be interesting, enlightening, and extremely informative if the actual information being presented had basis in fact that was supported by good data.

Unfortunately, because the flaws have received little press and good information is lacking, the array of assumption that we are stuck with rings far too hollow to even be considered.

 
At 5:46 PM, Anonymous Dave said...

It should have been tied to life expectancy from the beginning. Now people think they have a right to other people's money for decades because they're not dead like they would have been when SS was started.

People need to decide whether they want insurance or a retirement plan - they're not the same thing.

 

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