Apr 26, 2018

Raising Full Retirement Age Is A Bad Idea

     From Michael Hiltzik, writing for the Los Angeles Times:
Washington wonks love to portray raising the retirement age for Social Security as a painless "fix" for the program's finances. ...
But a new study punctures this argument with stark data showing that within the average there are winners and losers — mostly distinguished by household earnings and wealth. The analysis comes from the Social Security actuaries, who showed in a study released last week that mortality rates among people 62 and older are inextricably linked to lifetime earnings. The higher the earnings, the lower the mortality rate. ...
What the actuaries found is that lifetime earnings are a powerful predictor of mortality. As Kathy Ruffing of the Center on Budget and Policy Priorities points out, among men ages 65 to 69, those in the lowest 20% of lifetime earnings (less than $22,400 a year) had death rates more than three times as high as those in the top 20% (annual earnings of $74,356 or more). Specifically, the lowest-income group had a mortality rate 65% higher than the average of all men ages 65 to 69, while the highest-earning had a rate 39% less than the average. ...
As we've written before, these factors help to explain why proposals to raise the retirement age tend to come from well-nurtured policy wonks comfortably ensconced in Washington think tanks, or from members of Congress assured of a decent government pension after they leave office. ...

9 comments:

Anonymous said...

I have never counted on have Social Security retirement, I always figured we would get screwed out of our benefit in some way and that they would keep moving the retirement age out to silly levels. I also fully expect that they will move my Medicare date from 65 to at least 67 and possible 70. #ponzischeme

Anonymous said...

There are people who do not depend on Social Security, but there are many who have no choice or aren't able to manipulate finances so that they're financially secure if they become disabled or they get old and can't work anymore. I know I would have a difficult time making it on Social Security alone and am blessed to be able to continue working at age 71.

Anonymous said...

@12:22

Agreed. The idea that those who rely on Social Security do so voluntarily is absurd.

Anonymous said...

Let's all remember that Social Security is social insurance. It is not a retirement investment. It is insurance against lost income when retired or disabled. Poverty prevention. Don't think anyone plans to simply rely on that, but many have no choice or opportunity to make investments to supplement it.

Anonymous said...

You obviously haven't talked to a lot of Americans that are retiring. That pitiful 401K with $70 or $80,000 in it doesn't last long when retired. You go through the retirement review with people and tell them they are getting $1500 or $1800 RIB and the freak out, then tell them the Medicare B premium will come out of that and the Part D premium and that they are still on the hook for 20% of the bill!!!!

The first thing they say is "I cant live on that" the second thing I hear a lot is "that wont cover my house payment/rent" the third is "I paid in all my life for this!?!" This doesn't include the self employed who had an accountant that was able to "work it so you never showed a profit" and they find out that they are not going to have a monthly SSA check after Medicare is deducted, or that they will have to pay the premium for B directly. I see that at least 3 or 4 times a year.

I see these scenarios several times a month, that's just the folks that I have contact with as social service provider in a small town. On a national scale it is a very large number.

Anonymous said...

Not to worry. Since they would have already used the money for paid family leave under the Rubio plan, they won't be getting much anyway.

Anonymous said...

The "Normal Retirement Age" (NRA) is over 66 now and will be 67 in a few years with the current-law increases. The average retirement age is 63, so it makes no sense to say that the NRA is too low.

The primary effect of raising the NRA is to cut benefits for everyone, and that should always be emphasized. The reason some people advocate raising the NRA rather than a straight cut is that the vast majority of people are opposed to cuts, but might not realize that that is the effect of raising the NRA. Most people would prefer an increase in their own payroll taxes if necessary to prevent cuts. But the small, regular increases in the payroll taxes needed to keep benefits as scheduled (and other ways to raise extra revenue) are discussed a lot less than different ways to cut benefits.

Anonymous said...

Would raising the retirement age shift more of the burden onto the disability programs? More seniors applying for DIB instead of being ushered into the retirement program? And those seniors would be more likely to win --e.g., older bodies are usually more prone to breakdown, and they would get maximum advantage in terms of light/medium grids and heightened transferable skill standards.

Anonymous said...

@10:22

You're right. And Medicare would be out of more money because the seniors would need more health care.