[Paleopsych] NYT: In Overhaul of Social Security, Age Is the Elephant in the Room

Premise Checker 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


    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
    the system.

    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
    of Mississippi.

    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
    retirement benefits.

    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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