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Raise My Retirement Age


By John Martin - Posted on 17 April 2011

Social Security is not in the same boat of trouble Medicare is, but it could still use some shoring up. Now that we're finally talking about big-picture budget stuff, we might as well deal with the eventual Social Security problem instead of pretending it won't eventually run out of money. As Mark Warner reminded us today, there were 16 workers for every one retiree 50 years ago, and there are now just three workers for every retiree.  

I want billionaires to pay higher taxes (what they were under Clinton), I want the cap on Social Security taxes raised, and I want tax reform. In other words, I want the well-off to pay a little more and the hyper-rich to pay their fair share (to the only country that would allow so many to earn so much). Oh, and I also don't want to collect Social Security until I'm 68.

According to the David Leonhardt budget calculator on the New York Times' website, raising the retirement age to 68 would cut the deficit by around $71 billion by 2030-- not a cure-all, but a significant cut in any year. More importantly, such a move would go a long way to making sure Social Security can keep paying for itself.

Most 68 year olds I know are lucid and energetic and have zero interest in slowing down. Just today I heard from a man in his 60's who I greatly respect speak about how he was retiring from his current career and was eager to begin his second. He wasn't trying to be funny. There are lots of people who run for Senate, run for President and run major corporations well into their 70's and beyond. Being 65 is not what it used to be, by a long shot.

I'll be 68 in 2046. Thus far, I've been paying into the system for fewer than 11 years (actually fewer if you subtract the years I spent in grad school). For me, retiring in 35 years as opposed to 32 years is not only remote, it also doesn't seem too unfair, considering how little I've contributed thus far. I want to be working until I'm into my 70's, and, assuming I stay healthy, I expect to be. If you think people are leading more healthy and fulfilling lives now, just think of what the world will look like when life expectancy goes up another 3-10 years over the coming decades. 

Lastly, I want to contribute and sacrifice a little to help ensure the U.S. doesn't go bankrupt. I hope the President calls on everyone-- even those counting on their Social Security checks 20 years from now-- to make this sacrifice. It's fair, it makes fiscal sense, and it might (I said might) shield the President from charges that he's just interested in gauging the rich.

 

I'm kind of in-between on this.

On the one hand, I've got about twenty-five more years until retirement. I've done my best to do the "right" thing by saving money in my 401K when I can, although even right now at age 41 it pales in comparison to whatever (paltry) SS that I will get.

Now, as a Gen-Xer I certainly have realized over my life that I might not get ANY SS at all. And I know that my wife won't either, since she has been a stay-at-home mom for the past twenty years or so.

So yeah. I guess I could take reduced benefits when I reach age 62 or 65 or whatever (assuming I live that long) but depending on my health etc., it still seems like kind of a slap in the face.

For every person you know who lived well into his or her 60s, I probably know two or three who passed away before that. Including my mother, who died last year at age 60.

If I thought that SS was "taking from the rich to give to the poor", then maybe I might be a bit more sympathetic. But since there is a Social Security cap on income so that high-earners don't have to pay their fair share and since only salary income is taxed, then no. I share zero sympathy for raising the retirement age before raising the tax rate or eliminating the cap.

Don't tax the poor to feed the rich. 

Tin, well said.  Here's part of a conversation I had with a friend, Alan Hiestand...He and his wife are my age, and I have his permission to post, using his name. 

I fletched the arrows for the Viet Nam war, the rich got richer, I got arthritic fingers, and a promise. I made the editing equipment for the 1980’s feel good movie boom, the rich got richer, I got lungs full of aluminum dust, and a promiseI made the paper for the pre-digital paperwork boom of the 1990’s, the rich got richer, I got saturated in PCB’s and sulfur compounds, and a promise. I built the “Green Power plants” of the 2,000’s, the rich will get richer from these for 100 years, I got broken bones, and ruined joints, and a promise. Now I need to apologize to the wealthy, because as someone who prided himself on working as hard as I could, I know that it is just as embarrassing for me to ask you to make good on your promise of Social Security and Medicare, as it is for you to renege on your 40 years of promises

I've heard that removing the cap, not even changing the age, will fully fund Social Security for the next 75 years.

My full retirement age is 66, so 68 isn't that big of a leap.  BUT.....Even 65 or 66 is very hard for those who have demanding physical jobs.  A roofer, a carpenter, brick layer etc will have a hard time working until 60, much less working until almost 70.  For those with desk jobs, in air conditioned offices, it's a different story.

I'd like the see the cap totally removed...to me, it's the only SANE solution.

I hear you on those who do hard labor for a living. There are no easy answers here. There aren't going to be any easy answers. Unfortunately, it looks like we're not going to be able to get broad support (in congress and throughout society) for a comprehensive plan unless everyone gives up something, however.

If Obama and the Democrats are going to be able to answer those accusing them of bilking the rich, they're going to have to ask for some sort of sacrifice from the middle class. Right now, a lot of pundits are talking about raising taxes on middle income earners as well as the wealthy. I think it makes more sense-- for a lot of reasons-- to raise the retirement age instead.

There have always been people who earn their money as laborers. But even they are aging better today than they used to.

"Aging better" and doing physical labor, outside in the elements at 60 and over are two different things, J1.   You're still quite young, and have a job you can do as long as you can think and sit behind a desk.  I'm glad that you do, but it gives you an unrealistic view of what people can and cannot do as they get older.  We may "age well", but every passing year brings increased limitations, even when healthy.

I suggested a few things below, I'd like your thoughts on them.

Being a laborer in the 1930's was tough, but we didn't make special provisions for people in that line of work then, either. On average, people (in all lines of work) age slower now than they did when we first thought up SS. The average 60 year old physical laborer today will tend to be in better shape than the average 60 year old physical laborer of the 1930's (assuming he makes it to 60).

If we're going to base what people collect under SS on what sort of jobs they've had throughout their career, we're going to open up a whole pandora's box that doesn't make for managable policy. Why not take other factors, like race, genetics, intelligence, or physical strength into consideration? I don't see how it's fair to take something like line of work into consideration-- when there is at least some element of choice there-- and not take something like race, or genetic ability into consideration. 

 

I never suggested basing what anyone collects based on what type of work they do.  I'm using the type of work done by a large part of our society as an argument against raising the retirement age in general.   So you went off on a tangent for nothing.  LOLOL

No, I understood, but it still doesn't change the fact that social security is in a much different position today than it was back in 1930.

By your logic, we should lower the age of eligibility for everyone-- not just keep it the same. It's also hard to do physical labor when you're 55. 

Get back to me on that theory when you're over 60! ;-)  Speaking from personal experience, and that of my friends in the same age group, the changes in the last few years have surprised/shocked us all.  When I was 55, I could work outside, doing spring and fall clean-up in my gardens, with no problem.  This meant cutting back and/or planting shrubs and trees, digging and transplanting, spending days behind a shovel redesigning beds, etc.  For the last 3-4 years, (I'm now 64) I've had to get someone to do the hard physical part for me, and hate that, because it's something I really enjoy.  I often wonder what I would do if my income depended on such labor.  ;-(   That's reality, John. 

Life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and those attaining retirement age in 1930s were born in the late 1860s and 1870s when infant mortality was even higher.  After that is factored in, men attaining 65 currently can expect to live for 15.3 years compared to 12.7 years for men attaining 65 back then (these numbers come from a SS chart using the years 2000 and 1940, as close as I could find comparable info).

Which brings me to the real point....

The crux of the problem isn't age, life expectancy or the fitness of retirees.  It's the sheer volume of people retiring, due to overall population increases and the baby boomers hitting the system.  We must find a way to pay for it, and still assist seniors in taking care of basic needs like food and utilities.  There are a lot of options available besides raising the full retirement age, and I think we need to think outside of the box in order to obtain both.  Raising the age has always been the answer, and it's not working out so well.  The retirement age for those born in 1960 or later is already 67.  How high should we go????

With all of that said, I'd be willing to consider a slight raise in age (no more than a year) ONLY as long as the option of early retirement at 62 is available, and if it's part of comprehensive reform that includes increasing SS revenues. 

 

I'd be fine with that, as long as I could find work if I needed to. Age discrimination is alive and well here. I know of many people who are laid off in thier 50's and replaced by younger, cheaper workers, then there are no jobs for experienced people in their 50's and 60's. 

--
Forget not that the earth delights to feel your bare feet and wind longs to play with your hair

  well it all sounds great until you understand that all this would do is encourage 'creative' accounting to where income is diverted in to legal entities or other ways to reduce tax burdens - SS tax only applies to salary and many of the super rich draw little in terms of salary.  Most are passive incomes.

SS may end up getting more but the federal gov't would get less - any economic thinktank from the liberal to conservative agrees to on this point.   

googling this and read this USA today article which was interesting (even if old) on the effects of apply SS tax to all income:

 "Taxing all income could create another problem: huge monthly benefit checks for the richest people. That's because Social Security benefits are based on the taxes people pay into the system...

It wouldn't be disastrous for Social Security, though. Based on Rodriguez's life expectancy, Social Security would collect $32.5 million in taxes from the ballplayer and pay the elderly A-Rod only $15 million."

http://www.usatoday.com/news/washington/2005-05-31-taxing-rich_x.htm 

so how do you shore up SS - aside from keep govt hands out of the cookie jar

means test? not supposed to be a welfare program

raise age? fine for some, not for others

cut benefits? again fine for some, not for others

combination?   

**********************************

There is all the difference in the world between treating people equally and attempting to make them equal. — F.A. Hayek

Very interesting Mary, and points out the complexities of SS reform.  Of course, "creative accounting" and not taxing all income equally are major contributors to the mess we're in right now in this country, and need to be addressed in and of themselves.  But for now, it is what it is, so let's look at possibilities.....

Raising the age is a bad idea IMO, due to those whose work is more physical than cerebral.  As was pointed out earlier, jobs for those over 50 or so are very difficult to find for the average worker, and after 60, almost impossible.

Pass a law to keep government hands out of the cookie jar!

Means testing would not equal welfare as long as the income level was high enough so that the SS income would not make a difference in someone's life.  I'd be willing to go to $500,000 a year, or even above.

Too many seniors are dependent on their SS income for survival, so cutting benefits would be creating "death panels", in a manner of speaking.  Only those with very good pensions (almost unheard of today) and the wealthy wouldn't be hurt.

As for removing the cap, and the resulting huge benefit checks, that could be an easy fix.  There are already maximum benefits in place.  I realize this is based on earnings at the maximum taxable amount, but a maximum benefit could be easily put into place.

I'd love everyone's thoughts, both pro and con, about these suggestions.

 

 

Means testing would not equal welfare as long as the income level was high enough so that the SS income would not make a difference in someone's life.  I'd be willing to go to $500,000 a year, or even above.

Please explain this. It's been a long day behind the desk and I'm having trouble thinking. Growing old is tough!

 

I guess I'll find out when I get older. ;-)  But for now, let me explain....  Means testing is setting a yearly income limit above which one would not be eligible to receive SS benefits.  Some have suggested $50,000, but I think that is far too low.  After all, someone at that income level would benefit from the additional income in many ways.  On the other hand, one who makes half a million or more a year won't notice a change, one way or the other, by receiving or not receiving SS check each month.

Ah, ok. Got it.

Sure, I'm ok with this, but would prefer it happen at some high number like 500k a year, which I'm guessing doesn't exclude too many people anyway. 

If you notice, my suggestion in my original post on the subject was 500k.  I really think the idea of 250k being "wealthy" is misplaced.  That may be a lot of money in Podunk MS, but in a place like LA or NYC it's really not.

Well, it's $250K per individual, not family, so that seems pretty secure to me. Most households have 2 incomes. But I'd be ok with $500K. Personally, I would not mind the retirement age being increased by a few years. I love my teaching job and it's not hard labor (unless you count mentally.) But I was hired with over 100 people so most are predicting my district will offer a nice retirement incentive to kick us out and to save money and replace us with young, cheaper teachers, so I doubt I'll get the opportunity. I agree with Suzi, however, that some jobs are pretty tough on the body, so that just seems unfair and another slap in the face to a certain segment of our population, who have worked pretty hard to finally enjoy that retirement.

If President Obama can stick to adjusting the cap on SS as an effective fix, there will be no need for means testing or increasing the retirement age.  Here is  how President Obama answered a question at a town hall meeting at Northern Virginia Community College, in Annandale, Virginia. The problem is that Dick Durbin (Gang of 6) is hinting at "entertaining" some of the GOP ideas for reform in the name of compromise, which will weaken SS, IMO (see below.)


Q Hi, Mr. President. My name is Vinita Griffin (ph). I’m a late student here at Northern Virginia Community College. I’m in my second career now. My question is, in about 15 years I’ll be eligible for Social Security. And I’m part of the baby boomer generation, and I don’t know if there will be Social Security when I get ready to—and I probably won’t retire for another 25 years, I’m thinking.
THE PRESIDENT: No, you look pretty young. (Laughter.) You look like you’re—you look like you’ve got a lot of career left in you.

Q I’m about your age. But, yes, so I figure another 25 years I’ll be working. But I don’t know if it will be there when I need it, and I’m concerned about that.

THE PRESIDENT: Well, let me talk about Social Security. The big drivers of our deficit are health care costs. I mean, the thing that we’ve really got to get control of is Medicare and Medicaid. That’s what’s skyrocketing really fast. Because not only is the population getting older, but health care costs are just going up a lot faster than people’s wages and salaries—or tax revenues to the federal government.

Social Security is a problem but one that we can solve much more easily. So the first answer to your question is, Social Security will definitely be there when you retire. (Applause.) I’m absolutely confident about that. I am absolutely confident about that.

Now, here’s the thing. If we don’t do anything on Social Security, if we just don’t—if we don’t touch it at all, then what would happen is, by the time you retire, or maybe just a couple years after you retire, you might find that instead of getting every dollar that you were counting on, you’re only getting 75 cents out of that dollar. Because what’s happening is the population is getting older; there are more retirees per worker and more money starts going out than is coming in.

So we do have to stabilize Social Security’s finances, but we can do that with some relatively modest changes—unlike health care, where we’ve got to get in and work with providers and really get some much more substantial reforms. With Social Security, it’s just a matter of tweaking how it currently works.

Now, politically, it’s hard to do. Politically, it’s hard to do. For example—I’ll just give you one example of a change that would make a difference in Social Security. Right now you only pay a Social Security tax up to a certain point of your income. So a little bit over $100,000, your Social Security—you don’t pay Social Security tax.

Now, how many people are making less than $100,000 a year? Don’t be bashful. (Laughter.) The point is, for the vast majority of Americans, every dime you earn, you’re paying some in Social Security. But for Warren Buffett, he stops paying at a little bit over $100,000 and then the next $50 billion he’s not paying a dime in Social Security taxes.

So if we just made a little bit of an adjustment in terms of the cap on Social Security, that would do a significant amount to stabilize the system. And that’s just an example of the kinds of changes that we can make. (Applause.)

So we are going to have to make some changes in Social Security, but it’s not the major driver of our deficit. And what I’ve proposed is let’s work on Social Security, but let’s not confuse that with this major budget debate that we’re having about how we deal with both spending and revenues because that is the problem that is going to require some really hard work and some bipartisan cooperation. Okay?

I saw this written on a blog and tend to agree with it:

"Yesterday, Durbin (one of the Gang of 6) endorsed the idea of means testing it. That weakens it potentially fatally by taking what has been an extremely strong and popular social insurance program for the past 75 years—one in which every American is invested and benefits from—and turning it into a welfare program."

David Frum points out some negatives of means-testing from a right-leaning perspective.

And here are Ezra Klein's ideas on reforming Social Security.

This chart comes from the Congressional Budget Office's report on 'Policy Options in Social Security,' and it shows both what people think they are, and how much they'll save.

http://voices.washingtonpost.com/ezra-klein/allsocialsecurityfixes.jpg

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