What’s an old person anyway? Does it depend on how many years are behind you, or how many years you still can expect to live? Here is John Shoven:
The current practice of measuring age as years-since-birth, both in
common practice and in the law, rather than alternative measures
reflecting a person’s stage in the lifecycle distorts important
behavior such as retirement, saving, and the discussion of dependency
ratios. Two alternative measures of age are explored: mortality risk
and remaining life expectancy. With these alternative measures, the
huge wave of elderly forecast for the first half of this century
doesn’t look like a huge wave at all. By conventional 65+ standards,
the fraction of the population that is elderly will grow by about 66
percent. However, the fraction of the population that is above a
mortality rate that corresponds to 65+ today will grow by only 20
percent. Needless to say, the aging of the society is a lot less
dramatic with the alternative mortality-based age measures. In a
separate application of age measurement…GDP would be between seven and ten percent higher by 2050 if retirement
lengths stabilize.
Here is the paper (I can’t find a non-gated version). Note that the entire increase of life expectancy of the twentieth century has been taken in the form of retirement, rather than extra work. Of course our social security and Medicare policies have encouraged early retirement, and we have not adjusted age eligibilities for longer life spans and better health. For fiscal reasons, we will likely have to increase eligibility ages; not only will we spend less money but it will encourage more work.
If you have been thinking that a demographically-based American economic collapse is virtually inevitable, this paper gives some grounds for hope. Here is further commentary.
Take that, Robert Samuelson.
Now fetch me my free drugs and a Bahama Mama chaser, whippersnapper!
This seems like an opportunity for me to tell the changes that I would like to see in SS.
1. Collect the tax on all income.
2. Make one rate of payout. The same for those who paid in much and those who paid in little (SS is not a retirement plan). The payout should be low enough to reduce the total payout.
3. Raise the eligibility age to 73 and then index it for life expectancy from here on out.
Social Security actually discourages early retirement, by paying reduced benefits for people who retire at 62 instead of 65. A futile effort, as most people opt for the reduced benefits at 62. Retirement has a very powerful allure that will be hard to discourage.
Given the reluctance of business to hire anyone over the age of fifty, raising the age of retirement merely punishes the would-be retired while illustrating the difficulty of shooting pool with a rope.
Social Security is only insolvent by around 2% of taxable payroll. Raising taxes from 12.4% to 14.4% would cause the system to be solvent, though I don’t think that is the best option.
If we raise the EARLY and normal retirement ages to reflect current life expectancy (and index after that), raise the cap on taxable earnings from $97,000 to $120,000 or $125,000, and possibly add a .25% or .5% tax to both employers and employees, Social Security will be solvent again.
See this report for some more exact figures (2005): http://www.ssab.gov/documents/WhyActionShouldbeTakenSoon.pdf
Eventually the side clamoring for privatization and the other clamoring for hyper-progressivity (see Floccina’s recommendations) will have to come together.
“The best news I’ve heard in ages” doesn’t include needing to work as a Wal-mart shelf-stocker when I’m 75.
Captain Hook,
Thanks for the link to the Social Security Advisory Board paper. I disagree with their recommendation that payroll taxes should be increased now.
As long as current social security benefit payments are funded, there is no need to raise taxes. In 2017, when benefit payments begin to exceed tax receipts, then we can raise taxes.
If we raise social security taxes before 2017, Congress will spend the increased surpluses, just as they have done the past decade.
If we reduce benefits before 2017, we’re just providing more surpluses for wasteful Congressional spending.
I would support legislation which informs future retirees their benefits will be reduced in 2017. I would also support changing the COLA adjustment.
People sometimes complain about age discrimination at work. I’m 27, so I have no idea what they’re talking about, but this could be a problem for people who run out of decent job opportunities at 60.
So, the so-called “adult” (20+) is really a walking corpse…still alive because society has shielded it from natural forces of death.
This rates as the most surreal thing I have read all year.
“we have not adjusted age eligibilities for longer life spans and better health”
I thought we did in 1983?
John Mansfield,
We did adjust full retirement ages in 1983, enacting legislation based on findings of Alan Greenspan’s bipartisan Social Security Commission. Many argue the adjustment was not great enough.
What we did wrong in 1983 was raise social security taxes to a level that generated Trust Fund surpluses in the 90′s. A Republican Congress and an accomodating President Clinton simply spent those surpluses while simultaneously declaring they had balanced the federal budget.
Greenspan argued in the 90′s that social security surpluses should have been used to reduce the national debt. But both political parties ignored him.
I’m a physician and I’ve followed this topic for some time.
I see absolutely no evidence that the rate of age-associated cognitive disability is changing. I do see evidence that employment increasingly demands intact cognitive skills.
Extended lifespan does not have any economic advantages in the absence of extended cognitive functional span.
The situation is not improving, it is worsening.
Your optimism is misplaced.
徵信社
徵信
徵信社
Comments on this entry are closed.