"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Monday, May 16, 2011

Social Security Retirement Age

Social Security was enacted in 1935.   At that time, the average life expectancy for Americans was 61.7 years.   Obviously, that figure is distorted by early deaths that now would be avoided, primarily deaths in childbirth.   So, if you made it to 61.7, you were actually likely to live for a few more years.  

Nevertheless, when we began providing for the elderly at age 65, we were really providing for the elderly, with little expectation that they would live on average too much past 65.   Heart disease and cancer were untreatable; hips and knees fell apart and could not be replaced, the victims becoming bedridden and, often as not, dying of pneumonia; etc., etc.  

We are extraordinarily fortunate to live at this time when medical science has advanced so far and give so many so much additional time and quality of life.  The average life expectancy for Americans today is 77.9; and, of course, if you make it that long it's a matter of actuarial science that you are likely to make it much longer.   It's not uncommon anymore to talk about 90 and 95 and even 100 year old folks still around and still kicking. 

This is a great "problem" to have, don't get me wrong.  But it's a problem for a Social Security system that was not created and is not structured to deal with people living 15, 20, 25, 30 years beyond 65.   We could have fixed it much sooner, and should have fixed it much sooner; by the early 1970s, the average life expectancy for Americans had gone up by more than 10 years, yet the retirement age for Social Security remained the same.   In 1983 we made a modest fix, changing the retirement age in increments from 65 to 67, with people born in 1960 or after having a retirement age of 67.  (Note: born in 1959, my retirement age will be 66 years and 10 months.  My sisters, born in 1955 and 1957, will have retirement ages of 66 and 2 months and 66 and 6 months, respectively.)   But it isn't nearly enough.

No one who is serious about saving our country from fiscal ruin should disagree with the proposition that the first step in reforming Social Security will be to change the average retirement age significantly.   A real leader (like Paul Ryan) would propose something like this:

Age 60+                No change
Age 55-59             Retirement Age = 67
Age 50-54             Retirement Age = 68
Age 45-49             Retirement Age = 69
Age 0-44               Retirement Age = 70

Do I want to work until I'm 68?  No.   But should the federal government or me do the saving to pay for my retirement if I want to retire earlier?   And, beyond "should," can the government afford it?   No.  

Too bad for me.   Is there generational inequity?  Sure.   On the other hand, earlier generations also fought World Wars and, generally, had harder lives than we have.   So tough.

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