Should we move to a progressive pension age

[qpw3141]

There seems to be an ever increasing number of news articles about pension deficits and the fact that people will no longer be able to retire at the ages they traditionally could.

France is having problems at the moment trying to raise the retirement age.

Would it be a good idea for people to work progressively less as they age?

So, just as an example:

From 60 you would work four days a week.
From 65 three days a week
From 67 two days a week
From 70 one day a week
And from 72 you retire.

Of course, it could be handled on an hours per day basis as well as on days per week.

Obviously this would not be the easiest thing for small businesses with only a couple of employees to handle so there would probably need to be exemptions.

[Grumman]

Your implementation is ass-backwards. The variable the government has control over is when you start getting paid the pension, not how many hours you're allowed (or required) to work. If you wanted to do this, you'd do it by giving less money to people who retire early, scaling up to the full 100% at the new desired retirement age.

If the current retirement age is 60, and as soon as you retire after that you year you start earning 100% of your pension, you might instead make it so that a 60-61 year old who has retired gets 25%, a 62-63 year old who has retired gets 40%, and so on until a 70 year old gets the full 100%.

[campp]

There should not be a pension deficit in the first place, if the company was on the up and up. A worker should not have to suffer because some corporation is too stupid to plan correctly.

Working until 72? Are you kidding me? May work for some, not me.

[Fotheringay-Phipps]

The problem with pensions is that people are living too long. 100 years ago, no one had any idea of such a thing as retirement as we understand it. You worked as long as you could. The problem was what happened when you no longer could, and this is where pensions came in. What happened is that people got healthier and life expectancies got longer, so the pension system gradually evolved into an extended vacation "golden years" concept. Which is nice if you can afford it, but ...

The proper approach is raising the retirement age. The idea is that the percentage of a person's lifetime that they work should be relatively fixed. And the number of active employees per retiree should also remain relatively constant. The variable is the retirement age.

[These two don't always move in tandem, in places with low birth rates. This is a big part of the problem in Europe.]

[qpw3141]

The problem with pensions is that people are living too long. 100 years ago, no one had any idea of such a thing as retirement as we understand it. You worked as long as you could. The problem was what happened when you no longer could, and this is where pensions came in. What happened is that people got healthier and life expectancies got longer, so the pension system gradually evolved into an extended vacation "golden years" concept. Which is nice if you can afford it, but ...

The proper approach is raising the retirement age. The idea is that the percentage of a person's lifetime that they work should be relatively fixed. And the number of active employees per retiree should also remain relatively constant. The variable is the retirement age.

Exactly.

But rather than simply raise the retirement age, wouldn't it be better to phase out working over a number of years so that people worked the required proportion of their lives but wound down rather than suddenly stopping?

[Bryan Ekers]

By "progressive", I thought the OP was going to suggest something like:

Current retirement age: 65.

Will increase by one year every three years until it reaches 80 or Congress modifies the legislation, i.e. in 2013, it will be 66. In 2016, 67. In 2019, 68, etc. Someone who is now 40 can expect to draw SS in 2046, at the age of 76.

If one-per-three is too slow, I can imagine one-per-two or two-per-five. Something as gradual as possible to avoid screwing up people now 60+ who have budgeted to retire shortly.

[Fotheringay-Phipps]

Impractical from a workflow standpoint. Some people pull it off here and there. But it's not reasonable to assume that millions of semi-retired people will all do this.

[Simplicio]

The problem with pensions is that people are living too long. 100 years ago, no one had any idea of such a thing as retirement as we understand it. You worked as long as you could. The problem was what happened when you no longer could, and this is where pensions came in. What happened is that people got healthier and life expectancies got longer, so the pension system gradually evolved into an extended vacation "golden years" concept. Which is nice if you can afford it, but ...

The proper approach is raising the retirement age. The idea is that the percentage of a person's lifetime that they work should be relatively fixed. And the number of active employees per retiree should also remain relatively constant. The variable is the retirement age.

[These two don't always move in tandem, in places with low birth rates. This is a big part of the problem in Europe.]

Can't address how much of a problem this is with all pensions schemes, but in the case of Social Security, while the amount of time people live has grown somewhat, GDP has grown faster so that each person today draws out a smaller amount in terms of US GDP over their lifetime, despite their lifetime being longer. Increased individual payouts due to longer lives aren't the cause of projected deficits in the program, the decreased birthrate (and projected decrease in the birthrate, since the deficits don't actually materialize for another few decades) are.

With private pension funds (and other gov't pensions) my understanding is that the projected shortfalls are from a mixture of mismanagement and the fact that even well managed funds lost a lot of money during the recession.

[Fotheringay-Phipps]

Can't address how much of a problem this is with all pensions schemes, but in the case of Social Security, while the amount of time people live has grown somewhat, GDP has grown faster so that each person today draws out a smaller amount in terms of US GDP over their lifetime, despite their lifetime being longer.I don't think the amount that each person draws as a percentage of the GDP is a valid ratio. You can point to the combined amount that everyone on SSI draws as a percentage of GDP (I don't know how that number has moved over the years, but I would tend to assume that it's gone up a lot, per my earlier comments.) But citing to each individual person just ignores the growth in the number of people on SSI relative to GDP, which is precisely what is derived from the increased longetivity that I cited.

[UDS]

Phased retirement. It's already not uncommon.

Sometimes people do it by stepping down involvement with their current job. It's easier to do this if you own the business, or if you have expertise or experience that allows tyou "retire" and then come back two or three days a week as a "consultant". Not so much if you in a managerial position; the team you manage will need you to be there when they're there. You may be able to negotiate a move sideways to a less hands-on role, but that depends on how much your employer loves you and wants to keep your services even on a part-time basis.

It's probably more common to retire from one job, and then take up a quite different, part-time and (ideally) low-stress job.

(Part of) the idea, obviously, is to reduce the rate at which you deplete your retirements savings. (There is also the desire to retain the personal and social advantages of working - a sense of fulfilment, social interaction, a structure to life.) You may arrange a reduced pension payment now (and a higher payment in later years) or you can simply bank part of your pension, and draw down on it later, when you have ceased all work.

As more people do this, pension systems will develop ways of accommodating them. Here in Australia the superannuation tax legislation has already been amended to accommate the idea of people drawing on their retirement savings while still employed to some extent, to facilitate precisely these patterns of work.

[Wesley Clark]

The problem with pensions is that people are living too long. 100 years ago, no one had any idea of such a thing as retirement as we understand it. You worked as long as you could. The problem was what happened when you no longer could, and this is where pensions came in. What happened is that people got healthier and life expectancies got longer, so the pension system gradually evolved into an extended vacation "golden years" concept. Which is nice if you can afford it, but ...

The proper approach is raising the retirement age. The idea is that the percentage of a person's lifetime that they work should be relatively fixed. And the number of active employees per retiree should also remain relatively constant. The variable is the retirement age.

[These two don't always move in tandem, in places with low birth rates. This is a big part of the problem in Europe.]

We really aren't living much longer. Life expectancy at 60 has gone up about 1 year every decade, so a 60 year old now lives 6 years longer than they would in the 1940s.

However the social security tax rate is about 6x higher than it was back then, and retirement age is already 2 years older. So people are paying 6x more in taxes for an extra 4 years of social security benefits.

Raising the retirement age has a whole host of problems too. It pushes younger workers out of the job market, lowers productivity in some jobs, would increase disability and possibly health care costs, etc.

There are tons of things other than raising retirement ages that will work. You can lift the cap on social security, grow the economy faster, reduce income inequality (so more income goes to people earning less than 106k a year, which will increase SS taxes), etc.

Cutting benefits and raising the age are just 2 of the several options to keep the systems solvent.

http://www.dailykos.com/story/2010/8/31/897783/-ODonnell-Hits-a-Social-Security-Foul-Tip

[gonzomax]

Everybody is not an office worker. There are plenty of people doing physical jobs that can not be done by a 70 year old. If they are office workers ,they will have difficulty keeping up with new technology. They may be less valuable because of it. They are farther and farther from their school days.
Earlier retirement will help the unemployment problem. It will be a continuing problem so we should be pushing to lower retirement age, not raise it.
Can you imagine a 70 year old walking on iron rails erecting a building? They need earlier retirement.

[Grumman]

Earlier retirement will help the unemployment problem.
No, it will hide the unemployment problem. Forced obselescence is a shitty way to improve the economy.

Can you imagine a 70 year old walking on iron rails erecting a building? They need earlier retirement.
In this specific case, sure, but that's between them and their employer.

[Simplicio]

Can't address how much of a problem this is with all pensions schemes, but in the case of Social Security, while the amount of time people live has grown somewhat, GDP has grown faster so that each person today draws out a smaller amount in terms of US GDP over their lifetime, despite their lifetime being longer.I don't think the amount that each person draws as a percentage of the GDP is a valid ratio. You can point to the combined amount that everyone on SSI draws as a percentage of GDP (I don't know how that number has moved over the years, but I would tend to assume that it's gone up a lot, per my earlier comments.) But citing to each individual person just ignores the growth in the number of people on SSI relative to GDP, which is precisely what is derived from the increased longetivity that I cited.

If we assume that most people have always lived to receive at least one SS check (and that seems to be the case going by Wesly Clarkes numbers, average life-expectancy has been over the retirement age since the 40's) and as I said the payout per person who reaches SS age has fallen even as the time they spend collecting benefits has increased, then having more people on the roles due to increased life-expectancy won't negatively affect the solvency of the system. The reason is that its not really per-person in the system, its per-person entering the system. Once your there, it doesn't matter how long you hang on.

The only thing that matters is the number of people that live to collect that first check and enter the system, and under the assumption that most people have always made it to at least the first year of their retirement, the driving factor of how many people are getting that first check is the birthrate 65 years ago.

[Magiver]

There should not be a pension deficit in the first place, if the company was on the up and up. A worker should not have to suffer because some corporation is too stupid to plan correctly.

Working until 72? Are you kidding me? May work for some, not me.
The op referred to France so the question is not retirement programs but social security programs. And yes, people shouldn't have to suffer because some politician outspend the tax money available. Welcome to 12 trillion reasons why they should be in prison for fiduciary malfeasance.

[Really Not All That Bright]

Are you under the impression that they don't have pensions in France?

[qpw3141]

The op referred to France so the question is not retirement programs but social security programs.

I simply pointed out France as an example because I read a story from there on the day I made the OP.

The question is general, and not based on any particular country or economic system.

I wanted to explore whether people thought it would be better, generally, or in some cases, to wind down from work rather than cease abruptly.

It could just as easily apply to a closed system of a family of several generations running a self sufficient farm (where I'm pretty sure the wind down approach would be universal) as it would to more normal modern employments.

[adhay]

...
http://www.dailykos.com/story/2010/8/31/897783/-ODonnell-Hits-a-Social-Security-Foul-TipNice cite.

And for the top story this afternoon, consider the graph to the right. The Social Security payroll tax kicks out at $106,800, which means that the bulk of income in the to 10% of the income ladder is outside of the Social Insurance tax base.

And we have been putting more and more of our national income in the hands of the people who do not pay FICA on the majority of their earned income ~ and of course who pay FICA on none of their unearned wealth income.

According to the Trustees report, if the Disability Insurance trust fund is taken care of, covering the (overestimated) shortfall of Social Insurance will require 1.62% of taxable payroll.

Now the FICA tax rates for the Social Insurance fund are 10.6% (only half of that tax is shown on your paycheck, the other half if taken out of the cost of employing you as an "employer contribution". Of course, since its all considered to be a cost of employing you by an employer, the difference is only cosmetic).

Shifting 9% of US income back from the 10% who largely do not contribute to Social Insurance to the 90% who fund the program ... would be roughly a 9%/58% increase in the "taxable pay" ... which is a 15% increase in the Social Security taxbase ... and 10.6% of that is 1.59%, or almost the entire amount of the (over-estimated) projected shortfall.

I took early SS retirement in 2003 and am I glad I did.

Raising the retirement age is breach of contract, pure and simple. But, as they say, the best way to rob a bank is to own it.

[Markxxx]

Everybody is not an office worker. There are plenty of people doing physical jobs that can not be done by a 70 year old.

I agree, I had a temp job in a factory and a lot of these 50+ guys WANT to work. They show up and really try, but they are not fast enough anymore to keep up with an assembly line. So they don't get called back often.

Which is a shame as these guys WANT to work, they show up, they are ready to go.

[begbert2]

OP, what makes you think that most businesses want people who came in only one or two days a week? If I came in only one day a week my productivity would reduce 20fold, between remembering what I was working on, figuring out what happened in the meantime, and every day being friday.

[UDS]

The op referred to France so the question is not retirement programs but social security programs.
Pension plans and social security programmes are alternative (and often complementary) methods of providing income in retirement, and all involve wealth generated by currently productive workers being transferred to retired workers. But the cost of providing $1 of income in retirement is $1, regardless of whether it is financed through a social security programme, an employer-funded pension plan, or private savings. The issues raised by phased retirement are equally relevant regardless of which mechanism is adopted to transfer wealth to retired workers.

[UDS]

Can you imagine a 70 year old walking on iron rails erecting a building? They need earlier retirement.
Maybe they just need to change to a less physically demanding occupation?

[adhay]

Can you imagine a 70 year old walking on iron rails erecting a building? They need earlier retirement.
Maybe they just need to change to a less physically demanding occupation?Hammock balancing at union rates?

[Peremensoe]

Your implementation is ass-backwards. The variable the government has control over is when you start getting paid the pension, not how many hours you're allowed (or required) to work.

They already do regulate how many hours you're allowed to work. I've met a couple post-"retirement" guys who work as much as they're allowed to without losing benefits, because they can't afford either losing benefits or not working.

[gonzomax]

Can you imagine a 70 year old walking on iron rails erecting a building? They need earlier retirement.
Maybe they just need to change to a less physically demanding occupation?

Sure guys nearing retirement age are being sought after to get a new profession. They are high on the list. Just walk down to the corner and enter a brand new exciting high tech profession. No problem.
We have lots of unemployment don't you know. Getting them to retire earlier would open up possibliities for younger people.

[Susanann]

Should we move to a progressive pension age

From 60 you would work four days a week.
From 65 three days a week
From 67 two days a week
From 70 one day a week
And from 72 you retire.


What the heck are you talking about?

Your plan is REGRESSIVE!!!!, (not progressive).

[Really Not All That Bright]

No, it's progressive, although it could be regressive if you look at it from the other end. That's why it made perfect sense to the 20-odd other people who read the OP (even if it was an awful idea).

[IdahoMauleMan]

There seems to be an ever increasing number of news articles about pension deficits and the fact that people will no longer be able to retire at the ages they traditionally could.

France is having problems at the moment trying to raise the retirement age.

Would it be a good idea for people to work progressively less as they age?

So, just as an example:

From 60 you would work four days a week.
From 65 three days a week
From 67 two days a week
From 70 one day a week
And from 72 you retire.

Of course, it could be handled on an hours per day basis as well as on days per week.

Obviously this would not be the easiest thing for small businesses with only a couple of employees to handle so there would probably need to be exemptions.

How about if you simply

1. Let people keep all of their money during their working lifetimes (instead of having it deducted by the government for a 'pension' scheme)

2. Let them save or invest it any way they want to

3. Let them retire whenever they want, and spend it any way they want to?

How about that? Then you don't have to worry about any of this.

[gonzomax]

We used to do that. We found there were a lot of old people who had bad things happen to them beyond their control( it can happen to anybody), and they were living in abject poverty. Many people thought we could do better by the elders. So we made an attempt to keep old people from living out of garbage cans and eating cat and dog food.
The majority of bankruptcies are caused by illnesses. I suppose you know you are exempt from that , but most of us are not. You can get crippled in a car accident. In a minute, everything changes.
Only in a Libertarian dream world will it work out for all people.
Some countries honor their oldsters. Many in America think once they are old enough to retire they have no value.

[Peremensoe]

We used to do that. We found there were a lot of old people who had bad things happen to them beyond their control( it can happen to anybody), and they were living in abject poverty. Many people thought we could do better by the elders. So we made an attempt to keep old people from living out of garbage cans and eating cat and dog food.

Yeah, or freezing to death.

[Susanann]

Would it be a good idea for people to work progressively less as they age?
Should we move to a progressive pension age
From 60 you would work four days a week.
From 65 three days a week
From 67 two days a week
From 70 one day a week
And from 72 you retire.
No, it's progressive, although it could be regressive if you look at it from the other end. That's why it made perfect sense to the 20-odd other people who read the OP (even if it was an awful idea).


What the heck are you talking about?
Your plan is REGRESSIVE!!!!, (not progressive).
Progressively LESS. Are you joking? Progressively LESS?
That is mighty fancy "word spin"
progressively less = REgressive

Anyhoo, Where are the jobs for all these old gray haired feeble limping hard-of-hearing people with cataracts?
Who is going to hire the tens of millions of people who are 60, 65, 67, 70, and 72 years old.
(I know some younger people who are having a hard time finding a job)

Please tell us where all these jobs are, and be specific: give us real names and actual locations of companies ready, willing, and able to hire tens of millions of all these old old fart elderly senior grandpa and grandpa geezers.

.......................and how much will it cost the companies to buy group employee health insurance for all these 70 year old new hires?

Your idea sounds as REgressive as any regressive idea can be

[Susanann]

Definition of Regressive: Relapse to a less perfect state.

Taking away a 70 year old's Social Security pension and then making him go out and try to find somebody who will give him a job is: REgressive.

[IdahoMauleMan]

We used to do that. We found there were a lot of old people who had bad things happen to them beyond their control( it can happen to anybody), and they were living in abject poverty. Many people thought we could do better by the elders. So we made an attempt to keep old people from living out of garbage cans and eating cat and dog food.
The majority of bankruptcies are caused by illnesses. I suppose you know you are exempt from that , but most of us are not. You can get crippled in a car accident. In a minute, everything changes.
Only in a Libertarian dream world will it work out for all people.
Some countries honor their oldsters. Many in America think once they are old enough to retire they have no value.

Oh. I see.

So your assertion is that Social Security is going to people who would otherwise be destitute? Do I understand that correctly?

Are they collecting welfare, too? I'm a little confused. Perhaps you could help me out.

[adhay]

We used to do that. We found there were a lot of old people who had bad things happen to them beyond their control( it can happen to anybody), and they were living in abject poverty. Many people thought we could do better by the elders. So we made an attempt to keep old people from living out of garbage cans and eating cat and dog food.
The majority of bankruptcies are caused by illnesses. I suppose you know you are exempt from that , but most of us are not. You can get crippled in a car accident. In a minute, everything changes.
Only in a Libertarian dream world will it work out for all people.
Some countries honor their oldsters. Many in America think once they are old enough to retire they have no value.

Oh. I see.

So your assertion is that Social Security is going to people who would otherwise be destitute? Do I understand that correctly?

Are they collecting welfare, too? I'm a little confused. Perhaps you could help me out.Let me help you here.

I've been pretty much "bankrupt" all my life, by choice. Worked well when I had to and played when I could. In spite of my choosing to paid under the table whenever I could, I payed in enough to retire in 2003 at 62 on $500/mon. With COLA, capped rent and a generous Medicare/Caid, I'm stylin' now on $700/mo.

Without it? Destitution sounds about right.

[Capt. Ridley's Shooting Party]

So you want means-tested social security, right? Whereas your previous post implied you wanted to scrap social security altogether. Help me out here.

[IdahoMauleMan]

So you want means-tested social security, right? Whereas your previous post implied you wanted to scrap social security altogether. Help me out here.

I want it scrapped altogether, since it is a Ponzi scheme. There are no assets. If I was allowed to keep my own FICA contributions, I could purchase actual assets that could provide me with a return and a comfortable retirement.

But when I posited that as a solution, the response was that old people would starve.

So that must mean that SS is supporting the destitute, correct?

[Wesley Clark]

We used to do that. We found there were a lot of old people who had bad things happen to them beyond their control( it can happen to anybody), and they were living in abject poverty. Many people thought we could do better by the elders. So we made an attempt to keep old people from living out of garbage cans and eating cat and dog food.
The majority of bankruptcies are caused by illnesses. I suppose you know you are exempt from that , but most of us are not. You can get crippled in a car accident. In a minute, everything changes.
Only in a Libertarian dream world will it work out for all people.
Some countries honor their oldsters. Many in America think once they are old enough to retire they have no value.

Oh. I see.

So your assertion is that Social Security is going to people who would otherwise be destitute? Do I understand that correctly?

Are they collecting welfare, too? I'm a little confused. Perhaps you could help me out.

Are you implying that SS doesn't lift the elderly out of poverty? It makes up 40%ish of retirement funds, and for a large number of people is their majority source of income. W/o it the rates of elderly poverty would be far far higher.

Companies are not going to match 100% any pension plan unless the government is forcing them to except in a small minority of jobs (unlike SS which applies to all companies). That is what is great about social security, it forces companies to treat workers well. You pay 6.2% and the company pays 6.2%. There is no 'we will match 50% of your funds up to 6%, until we decide not to. I hope the market doesn't collapse 5 years before your retirement' 401k bullshit. You get a sustainable, reliable pension and your employer is forced to contribute.

It may not mesh in libertarian utopia, but neither did the civil rights act of 1964. In the real world social security is a great achievement, and there is a reason virtually every wealthy nation has a program like it.

[kunilou]

I want it scrapped altogether, since it is a Ponzi scheme. There are no assets. If I was allowed to keep my own FICA contributions, I could purchase actual assets that could provide me with a return and a comfortable retirement.

You can keep saying that, but there's no way to prove or disprove your assertion.

Let's say you retired in 2007, with a nicely balanced portfolio of stocks and bonds. Within a year, your stocks would have dropped by as much as 50% and your bonds would be paying about 1% in interest.

You wouldn't have the chance to sit back and let your portfolio recover, because you'd already be drawing it down to cover your retirement. On the other hand, you might retire next week, and the market might go on a 20-year, no-recession binge. Hooray for you. Meanwhile, the people who retired three years earlier are on a downward slide.

But when I posited that as a solution, the response was that old people would starve.

So that must mean that SS is supporting the destitute, correct?

43% of those ages 75 and above earn less than 200% of the federal poverty level (http://www.ebri.org/pdf/publications/books/databook/DB.Chapter%2006.pdf)- that includes 10% of the population age 65-74 and 17% of those aged 75+ whose total income is below the poverty level. (For ages 65+, the federal poverty level is $10,326 for individuals and $13,030 for couples).

The average SS benefit for retired workers is $1,170.80 per month or $14,049.60 per year. That's enough to push a household at the poverty level to 200% of the poverty level.

So, the answer to your question is yes. Social Security supports a large number of people who would otherwise be living in poverty.

[Capt. Ridley's Shooting Party]

So that must mean that SS is supporting the destitute, correct?

In many cases, yes, I believe the evidence overwhelmingly supports the conclusion that state-funded pension schemes are all that's between outright destitution for many OAPs, as others have shown.

[Capt. Ridley's Shooting Party]

There are no assets. If I was allowed to keep my own FICA contributions, I could purchase actual assets that could provide me with a return and a comfortable retirement.


Yes, I suppose you could. Let's suppose you used the funds you saved to pay into a private pension. What happens if it goes bust? Destitution?

[Fotheringay-Phipps]

We really aren't living much longer. Life expectancy at 60 has gone up about 1 year every decade, so a 60 year old now lives 6 years longer than they would in the 1940s.

However the social security tax rate is about 6x higher than it was back then, and retirement age is already 2 years older. So people are paying 6x more in taxes for an extra 4 years of social security benefits.I've not checked these numbers, but even if true they are misleading. Because the number of years collecting SSI is "leveraged" in that no one collects at younger ages.

Imagine a simplified situation in which the retirement age is 65 and every single person died at 66. Everyone gets exactly one year of SSI. Now the life expectancy increases by 6 years to 72, i.e. every single person dies at 72. Now everyone gets 7 years of SSI. It's misleading to say that the average life expectancy increased by only six years, with the implication that this is only an increase of less than 10%, since it's an increase of 600% in the number of years of benefits.

(Also, the problems that the system faces are in the future, and are based on life expectancy continuing to improve beyond what it already has.)

Raising the retirement age has a whole host of problems too. It pushes younger workers out of the job market, lowers productivity in some jobs,I can't imagine how society as a whole is less productive by having some people working versus doing nothing.would increase disability and possibly health care costs, etc.Possibly by some very small amount.
If we assume that most people have always lived to receive at least one SS check (and that seems to be the case going by Wesly Clarkes numbers, average life-expectancy has been over the retirement age since the 40's) and as I said the payout per person who reaches SS age has fallen even as the time they spend collecting benefits has increased, then having more people on the roles due to increased life-expectancy won't negatively affect the solvency of the system. The reason is that its not really per-person in the system, its per-person entering the system. Once your there, it doesn't matter how long you hang on.

The only thing that matters is the number of people that live to collect that first check and enter the system, and under the assumption that most people have always made it to at least the first year of their retirement, the driving factor of how many people are getting that first check is the birthrate 65 years ago.I'm not sure what any of this means.

The percentage of people who live long enough to enter the system has undoubtedly increased over the years as well. I'm not sure if it's true that most people have always lived long enough for this, and it does not follow from the average life expectancy being greater than the SSI retirement age (consider 2 people dying at 64 and one at 68).

But I don't see the special relevance of this number anyway, or any of your other assertions. As above, what matters if the ratio of people paying in to people collecting.

[Rumor_Watkins]

I think we need some Logan's Run style pension reform...

[adhay]

I think we need some Logan's Run style pension reform...Excellent. But let's make it voluntary.

Make suicide painless, available on demand and the Patriotic thing to do if you're finally tired of suffering the slings and arrows of outrageous fortune. I'm thinking a new Cabinet member, Secretary of Hemlock.

Kind of a self-run death panel. Pick up an application at the PO for an all-expense paid week in Hawaii and then a quick passage beyond any need for SS. If it were me, I'm thinking an overdose of smack.

I will add, it's not me. At least at the moment.

[jtgain]

43% of those ages 75 and above earn less than 200% of the federal poverty level (http://www.ebri.org/pdf/publications/books/databook/DB.Chapter%2006.pdf)- that includes 10% of the population age 65-74 and 17% of those aged 75+ whose total income is below the poverty level. (For ages 65+, the federal poverty level is $10,326 for individuals and $13,030 for couples).

The average SS benefit for retired workers is $1,170.80 per month or $14,049.60 per year. That's enough to push a household at the poverty level to 200% of the poverty level.

So, the answer to your question is yes. Social Security supports a large number of people who would otherwise be living in poverty.

I would agree, but that doesn't paint the whole picture. Most older people have homes that are mortgage-free and don't have kids to support anymore. They also have government medical insurance (Medicare).

So, most of us would be in a real pickle to live off of that kind of money, but when you take house, children, and medical premiums out of the equation, that frees up an enormous amount of money.

[Wesley Clark]

I've not checked these numbers, but even if true they are misleading. Because the number of years collecting SSI is "leveraged" in that no one collects at younger ages.

Imagine a simplified situation in which the retirement age is 65 and every single person died at 66. Everyone gets exactly one year of SSI. Now the life expectancy increases by 6 years to 72, i.e. every single person dies at 72. Now everyone gets 7 years of SSI. It's misleading to say that the average life expectancy increased by only six years, with the implication that this is only an increase of less than 10%, since it's an increase of 600% in the number of years of benefits.

(Also, the problems that the system faces are in the future, and are based on life expectancy continuing to improve beyond what it already has.)

I can't imagine how society as a whole is less productive by having some people working versus doing nothing.

http://www.infoplease.com/ipa/A0005140.html#axzz0zwAhNgl2

Life expectancy at 60 for white men went from 15 years to 21 years from 1940 to 2004. Rates are similar for white women but only 4 for non-white men and 6 for non-white women.

So you add in the higher retirement age of 66-67 and a non-white male really only gets an average of 2-3 extra years of SS payments, or an extra 33% (going from 9 to 12 years in retirement).

A white man in 1940 may have collected for 10 years (assuming a retirement age of 65), now he would collect for 16 (assuming a retirement age of 66). That is a 60% increase in payouts per enrolee. Plus there are more people who would've died before age 65 than in the past, but I don't know what % of the public that would apply to.

But like I said FICA taxes for SS are 6x higher than they were in the 40s.

http://www.taxpolicycenter.org/taxtopics/images/ptax2_2.jpg

People pay 6x more in taxes for 60% more in payments.


The concept that society is more productive with more people working assumes there are enough jobs to go around, which there are not. An older worker who has higher wages, higher health costs, less energy, more disability and knows less about new technology (all stereotypes about the elderly but meh) may cause a worker in his 20s to be unemployed since that job can't open until the older worker retires. At my current job one of my coworkers only got hired because someone else retired.

[Mozart1220]

If the government was not constantly stealing from the trust fund, SS would be fine. There would be a slight defecit through the "boomer" years which was planned for, and made up later.

The only reason SS is in trouble is that every administration since Johnson (I think, may be sooner) started "borrowing" from it, but never following through on paying it back, which is STEALING.

[TurboNuke]

If I had saved 13% of my income since I started work at 16 I would have a pretty awesome retirement. If SS can't provide a decent retirement then it's because of mismanagement. Fix the mismanagement, don't increase the retirement age.

Also, I work as a mechanic, working til 70 is a joke. People who espouse increasing the retirement age are people with office jobs or young people who don't know that getting old is hard.

[SmartAlecCat]

The only reason SS is in trouble is that every administration since Johnson (I think, may be sooner) started "borrowing" from it, but never following through on paying it back, which is STEALING.

From the SS perspective, can't you look at it the other way around? SS is investing in T-Bills?

If they just kept the money as cash, earning no interest, they would have even less, right?

The rest of the budget would be in just as bad a position if they were borrowing from the chinese vs. SS.

[SmartAlecCat]

If I had saved 13% of my income since I started work at 16 I would have a pretty awesome retirement.

Are you including the insurance premiums for disability and survivor benefits for spouse, children, etc.?

Also, are you accounting for risk? This is a defined benefit annuity with as close to 100% reliability as it is possible to obtain.