[Paleopsych] NYT: In Overhaul of Social Security, Age Is the Elephant in the Room
checker at panix.com
Sun Jun 26 18:34:37 UTC 2005
I'm not sending this so much to discuss the politics of Social Security
but to inform you of the increase in longevity at the end of life, rather
than at the beginning. It's in the first paragraph.
Does anyone predict, out of each year of increased life expectancy, what
fraction of a year will there be of increased employment?
We can expect a continued increasing premium on raw intelligence (the driving
force behind increased wage inequality in the U.S. and, I presume, other
countries). The problem is that raw intelligence peaks about age 20 or even
earlier (what's the data on this). If earnings = intelligence + experience,
then the peak earning year will decline, though not by as much as one might
think. The idea that with age comes wisdom was true in paleolithic days but not
so much anymore. Our minds a geared to that era, and so oldsters get more than
they deserve. The relentless grindings of capitalism will put an end to that,
provided output can be better measured, which is hard to do in a service
The authors of the article did not mention another way the Social Security
deficit will be narrowed: a spreading acceptance of euthanasia.
In Overhaul of Social Security, Age Is the Elephant in the Room
By ROBIN TONER and DAVID E. ROSENBAUM
WASHINGTON, June 11 - Americans turning 65 this year can expect to
live, on average, until they are 83, four and a half years longer than
the typical 65-year-old could expect in 1940. And government actuaries
predict that American life spans will just keep growing.
This demographic trend - by 2040, the average 65-year-old will live to
about 85 - has major financial implications for Social Security and
major political implications for the lawmakers now trying to overhaul
Policy experts across the political spectrum, who agree on little
else, have told Congress in recent weeks that any effort to improve
Social Security's long-term finances should somehow deal with this
jump in life expectancy - by adjusting benefits, raising the
retirement age, increasing taxes or creating new incentives to work
Not only are Americans living longer, these experts say, but most are
also retiring earlier, and these demographic pressures will be
heightened by the sheer size of the baby boom generation - 78 million
strong - which will begin to retire in the next five years.
Major committees in the House and Senate, struggling to produce Social
Security legislation this summer, are beginning to confront the
longevity issue. Senator Charles E. Grassley, Republican of Iowa, the
chairman of the Finance Committee, says the retirement age will be
addressed in the solvency plan he hopes to develop with his fellow
party members in the coming week, and his Republican counterparts in
the House are holding hearings on the issue on Tuesday.
"We've got to deal with reality," said Senator Trent Lott, Republican
But the politics are treacherous, all the more so because Republicans
are dealing with it alone. Democrats have refused to engage in
discussions over Social Security's finances until President Bush
withdraws his proposal to create private investment accounts in the
The most direct way to deal with the financial strain of greater
longevity is simply to raise the retirement age, which now stands at
65 years and 6 months and will gradually rise under current law to 67
for people born in 1960 and later. But of all the options to shore up
Social Security's finances, that ranks as one of the most unpopular,
pollsters say. In a New York Times/CBS News Poll earlier this year,
nearly 8 out of 10 respondents said they would oppose raising the age
when people are eligible for Social Security benefits.
Political strategists say this issue is viewed very differently by
policy experts, who may see nothing wrong with working longer, and
average Americans, with jobs that may be uninteresting, stressful or
physically demanding, who are often eager to retire and doubtful of
their employment prospects in their mid-to-late 60's.
"In Washington, the focus is on the demographic reality that people
live longer, and most of the people who are having this conversation
wouldn't mind working well into their 70's and 80's," said Geoff
Garin, a Democratic pollster. "But out in the country, most working
people don't look forward to working forever."
Glen Bolger, a Republican pollster, agreed: "Forty might be the new
30, but they don't necessarily believe that 70 is the new 65."
Lawmakers in both parties have acknowledged that many people not only
want to but also need to retire at 62 or 65. Representative Bill
Thomas, Republican of California, the chairman of the Ways and Means
Committee, recently reflected, "I know my father, in terms of his
plumbing activities, was pretty - the phrase, I guess, would be pretty
used up by the time he was 65." Representative Earl Pomeroy, Democrat
of North Dakota, a committee member, said, "I represent a lot of
people doing some pretty hard labor out there on those farms."
As a result, many analysts say any proposal to deal with increased
life expectancy would probably include some protections for low-income
workers in physically taxing fields. There are other potential
inequities associated with raising the retirement age: on average,
women live longer than men; whites live longer than blacks; the rich
live longer than the poor.
Another political hurdle is AARP, the lobby for older Americans, which
notes that a major increase in the retirement age is already under way
as a result of the last significant overhaul of Social Security, in
1983. The normal retirement age, as the Social Security Administration
calls it, is to rise by about two months a year until it reaches 67 in
2027. (One proposal occasionally discussed is simply speeding up the
increase to 67.)
Workers can take earlier retirement at 62, as most do, but their
benefit checks are reduced as a result - 20 percent or more every
month for the rest of their lives, depending on how early they retire.
David Certner, director of federal affairs for AARP, said, "Just
because you raise the age, doesn't mean there will be jobs out there
so you can continue working, even if you want to." Moreover, he added:
"you've got a whole group of people who are just not physically or
mentally able to continue. I think a lot of people recognize that if
you change the age, you just push those people onto the disability
rolls," which are financed by the same Social Security taxes as
Still, experts say that the system as a whole needs to reflect the new
demographic realities. C. Eugene Steuerle, a senior fellow at the
Urban Institute and a former official in the Reagan administration,
notes that Americans already retire, on average, for close to
one-third of their adult lives, and argues that Social Security "has
morphed into a middle-age retirement system."
The change in the last 60 years is striking: The average retirement
age in 1940 was 68. As recently as 1965, about two-thirds of workers
did not begin drawing Social Security benefits until they were 65 or
older. Now, more than half retire at 62 or younger, and three-quarters
receive their first benefit checks before they are 65.
Edward M. Gramlich, a governor of the Federal Reserve Board and an
authority on Social Security, says that if the architects of Social
Security "had known about the explosion in life expectancy, they would
have put in some adjustment in the retirement age."
One way to address the problem - and the direction some lawmakers seem
to be heading in - is an automatic adjustment in the retirement age or
the benefits received at each age to reflect increases in life
expectancy. That way, retirees' total lifetime benefits would remain
more or less constant even as they lived longer. Automatic changes are
already made for average wage increases and price inflation.
For individuals, such a change, called indexing for longevity, would
be little different from a direct increase in the retirement age or a
specified reduction in benefits, said Douglas Holtz-Eakin, director of
the Congressional Budget Office. But for the system, Mr. Holtz-Eakin
said, it would make a big difference because the changes would be
automatic and would not require new laws.
It might also be politically attractive because politicians would be
relieved of the responsibility of periodically voting to raise the
retirement age or to cut benefits.
Adjusting the system for longevity would not contribute much to
solving Social Security's solvency problem over the next 30 years or
so, Mr. Holtz-Eakin said. But over 75 years and longer, he said, it
would have an important effect.
Still, pollsters question whether even a gradual adjustment based on
life expectancy will sell. "You can call it indexing for longevity in
Washington, but in America it's raising the retirement age," said Mr.
Garin, the Democratic pollster. Mr. Bolger, his Republican
counterpart, said, "There's no appetite for anything related to age
among the public."
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