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Don’t Raise the Retirement Age

By Taylor Marvin

The United States should raise the retirement age.

This is the closest thing to conventional wisdom in the American fiscal policy debate. Voices from both political philosophies have supported legislation that would gradually raise the minimum age to collect Social Security from the current sixty-six years old to seventy- future House Majority Leader John Boehner has supported the option, as have a variety of liberal media outlets and policy analysts. Supporters argue that raising the minimum retirement age is necessary to adjust for both the increasing life expectancies that lengthen the average retirement and the rapid aging of the American population that places growing pressure on the fiscal solvency of federal entitlement programs like Social Security. These are certainly valid points- in the 1930’s the average American life expectancy hovered around sixty. When passed Social Security was intended as a benefit program that only a lucky, long-lived, fraction of the population would ever collect from, and then only for a few years. Today, gains in life expectancy mean that the average retiree can expect to collect from Social Security for at least a decade, and often much longer. This has placed huge strain on the program as a whole, a pressure that’s compounded by the fact that the United States is rapidly aging. In the 1950’s retiree’s eligible to receive Social Security were a tiny fraction of the population:

Source: NationMaster

In the near future, thanks to longer lifespans and falling birthrates the situation is much different.

Source: NationMaster

Because today there are so many fewer workers paying into the Social Security system per retiree collecting from it than there once was funding the program today is much harder. Combined these demographic shift do make it much harder to justify the sixty-six year old minimum retirement age, and supporters of a rise are right to argue that raising the retirement age is a solution to this looming problem.

However, raising the minimum retirement age is a deceptively easy solution that isn’t the best that our society can do. The fiscal future of the Social Security program should be viewed as part of the wider whole of the federal budget, not as a discrete unit. While Social Security costs are rising, these increases are only a small part of increasing federal entitlement obligations:

Source: The Incidental Economist

The costs of federal healthcare programs will eventually dwarf those of Social Security and are a much greater threat to the future fiscal solvency of the United States. Moreover, every dollar that Social Security spends goes directly to seniors and enables then to improve their lives through increased consumption. Given the massive inefficiencies in American healthcare the same can’t be said for Medicare or Medicaid spending- an individual dollar spent in these programs is much less beneficial because so much of federal medical spending is lost to inefficiencies and waste rather than benefiting patients. Additionally, it’s medical programs, not Social Security, whose costs will skyrocket in the future. While some of these rapidly rising costs are due to the aging of Americans and can’t be avoided most is driven by excessive cost growth and can be limited through sound healthcare policy and cost controls:

If the federal government could limit medical entitlement, and to an extent defense, spending we wouldn’t have a long-term budget crisis. With these programs gradually made more efficient and cheaper there will be money in the federal budget for an unchanged Social Security program. Yes, because Social Security is funded separately from the rest of the federal government we would have to move a lot of revenue around but this isn’t a major issue- Congress could easily increase Social Security withholdings in exchange for lower federal taxes made possible by reined in spending. If we increase the minimum retirement age we’ve basically using cutting Social Security as an easy way out- cutting the senior benefits that do real good to subsidize the healthcare inefficiencies that only waste money.

Yes, with increasing life expectancies the length of the average retirement has risen dramatically- an argument that advocates of raising the minimum retirement age often offer to justify a longer working lifespan. But why should the retirement age even have to stay constant? We have made enormous social strides since the 1930’s- people live longer, more confortable lives than ever before. Shouldn’t more leisure time at the end of a citizen’s life be a good thing? What use is our social and technological progress if it only means that people just have to work longer? Many people don’t like their jobs- they shouldn’t be forced to work longer if it isn’t absolutely necessary. The mark of a successful society isn’t just output or wealth, it’s happiness and how easy it is for citizens to lead meaningful lives. For most of us, the activities and people that give our lives meaning are found outside of work, and increasing the time we have to devote to them can’t be bad. It’s easy to get lost in the formal definitions of success- if we want to build a society we can be proud of we can’t forget that there’s another measure of success besides wealth. A long retirement is part of it, and we shouldn’t give that up.

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7 Comments Post a comment
  1. Great post. The only point of contention I have is should the increase in retirement age be mandatory? There are fiscal benefits but seeing the examples from Greece and France (of the discontent of people). Maybe our govt. should just encourage a late retirement with some benefits?

    I read somewhere recently that, 80% of boomers now entering the age of 50 expect to work past their retirement age.

    Don’t know if that’s entirely true but I think its a healthy trend.

    Cheers,
    S

    December 26, 2010
  2. I was searching about issues about this and I finally found some info.
    Thanks for that!

    I also have my one blog but that isn´t about this and is in Dutch, maybe
    someday I will start a new blog and just post thing like you´re doing.

    Keep up the good work mate!

    December 27, 2010
  3. My question is why have a retirement age? Is it not far fairer and more logical to have a defined benefit system which would then allow you to retire at whatever age you want to do?

    The only decision that you would then have to make is when do think you have enough money. People would work for as long as they were capable.

    Apart from being highly manipulated defined benefit schemes are extremely unfair and socialistic.

    I believe that playing around with retirement ages is like shifting deckchairs while the ship is sinking – the whole system needs to be overhauled.

    March 3, 2011
  4. Hello,
    Great Post. I think you are exactly right that raising the social security age is something politicians have grabbed on to so they don’t have to address the more difficult issues. As you pointed out Social Security is not the largest increasing drain. The largest part of the budget that is increasing the deficit is our military spending and the increase in health care costs. I think the health care package that president Obama passed is a good START to the health care question but we can go farther down the path of seeking out savings and efficiencies while still providing benefits.

    Why should the result of our health, social and technology advantages result in longr work lives? A better retirement should be the goal.

    All the best,
    Ted

    April 28, 2011
  5. It is with great emotion that I read these. I am old with no money.

    May 12, 2011
  6. AARP is a big hawker for health coverage, and they get paid to promote policies, but they do not offer any policies themselves. So you want to evaluate the policies they promote the same as any other policy. With skepticism, and according to your needs.

    January 29, 2012
  7. G’Day! Prospectjournal,
    Thanks you for your post, President Obama’s bipartisan Deficit Commission recently released a proposal aimed to fix America’s budget issues and take steps to strengthen Social Security for the next 75 years.
    Thx.

    February 11, 2012

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