I see where Rick Scott seems to be walking back or minimizing his proposals on Social Security and Medicare. Social Security “reforms” have long been political kryptonite. The idea that Republicans want to abolish these programs makes great political theater. While a short-term election benefit for Democrats on this issue has appeal, what’s really needed instead of campaign posturing is another bipartisan commission to hack out solutions to keep both programs viable well into the future.
You have to be careful about drawing conclusions about “steady increase of life span”. Average life expectancy has indisputably been increasing over time, but note that life expectancy is stated as expectancy from a given age, most typically life expectancy at birth (LEB). The LEB for a baby born today is higher than ever, but increase in average life expectancy is not the same thing as increased lifespan, because most of it reflects the fact that environmental and disease risks that might kill people at some point in their lives have been greatly reduced, so more people live to old age instead of being killed off by untreatable disease at a younger age. It does NOT mean that everybody is going to live to 100+.
Those two different factors are very relevant to managing social security. The fact that more people survive to old age means that the cohort of elderly will be larger, making social security more important than ever. It’s not an argument for increasing the age of eligibility as if on average everyone will be collecting it for a much longer time, because that’s not generally true.
Per this chart at Statista, the life expectancy of a 65-year-old man in the US has in fact been steadily increasing. In 1960, that man could expect to live another 12.8 years, by 1980 14.1 years, by 2000 16 years, and by 2019 a 65-year-old man could expect to live another 18.2 years.
In Canada, the adjustments were made to the amount being paid in, rather than cutting the amount being paid out. This has kept the CPP (Canada Pension Plan) solvent for the next 75 years, according to the Chief Actuary of Canada (non political position). I know - horror upon horrors, it sounds like socialism!
(ETA: And the life expectancy of Canadians is significantly higher than Americans, and actually went up over the past 2 years, rather than dropping as it did in the USA)
I’m not denying that actual lifespan has increased somewhat in recent times (over the past 50-60 years). What I’m saying, though, is that over longer time periods, the really dramatic increases have been in terms of life expectancy at birth, not so much in longevity. For example, in 1860 the average life expectancy was just 39.4 years, yet at the same time, just like today, many people lived into their 70s and 80s – once they had survived the hazards of childbirth and it they didn’t catch any diseases that at the time were incurable.
Yes, increasing the age of full SS benefits has already been done. Used to be the full retirement age was 65, now it is stair-stepped up depending upon when you were born. I am in the process of applying and my full benefits age is 66yrs and 4 months because I was born in 1956.
But you don’t need dramatic increase to worry about social security solvency when the retirement with full benefits age has risen only 3 years (I believe) in the 87 years social security has been around.
Since the early 1970s, Social Security benefits have received an automatic cost-of-living increase matching the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). (There is dispute about whether CPI-W accurately matches the spending habits of retired individuals, but for example SocSec benefits will increase by 8.7% effective in January.)
The problem is demographics. The average expected lifespan of a 65-year-old has increased by about 50% since 1960 (see cite upthread), while the number of retirees has increased dramatically congruent with the outsize impact of the baby-boomers relative the to the size of the cohorts before and after them.
Unless the purpose would be to return it to the original plan that was passed under FDR. When Social Security was established, life expectancy was about 62, whereas you had to reach 65 to collect.
This is incorrect. Life expectancy at birth was that low, but that had a lot to do with high infant and childhood mortality; if you survived into your 60s, you could reasonably expect to live another decade and a half.
For Americans who turned 21 in 1896 (and hence would have turned 65 in 1940), around 54% of men and 60% of women did in fact survive to age 65. In 1940, a 65-year-old man could expect to live another 12.7 years, while females could expect to live another 14.7. There was never an expectation that most people who paid into Social Security would die before collecting.
And by the way, when you read the term “life expectancy,” the standard convention is that it is understood to MEAN “at birth” unless otherwise noted. So you reinforced my point while claiming that I am incorrect.
Well then I don’t understand what point you were trying to make. The expectation, the “original plan that was passed under FDR,” was that the majority of people who lived long enough to pay into Social Security would also live long enough to collect. That’s how it worked when SocSec was new, and that’s how it works now, so what would we be “return[ing]” to?
Most of the people whose early deaths brought down life expectancy at birth died in infancy/childhood, and hence never paid into Social Security. Their life and death had no financial impact on Social Security at all.
It’s already been creeping up, and other limits have been put in place. My “full retirement age” is nearly 67; my 6-years-older brother’s was 66. I could still retire at 65 but at a steep cost - that’s one way they can cut SS without “cutting SS”. And if they still allow you to start collecting at age 62, the older your “full retirement age” is, the steeper a cut you get if you take it at age 62.
My brother can also claim on his ex-wife’s account (and is doing so, and planning to do so until he turns 70, which allows him to maximize his own benefit - without impacting hers at all). That loophole got closed for people born the year after he was. So one recommended approach that I read about years ago, where one spouse claims on the lower (higher?) earning spouse, at age 62, then holds off on claiming their own until age 70, would not work any more.
I suspect that if the age is raised, it’ll be a gradual thing like what they did with my age group. Anyone born in 1960 or later has a FRA of 67; they might change it to, say, 67y2m for 1960-1963, 67y4m for 1965-1966 and so on.
The other option I heard of, years back, was the thought of basically privatizing it - much as many employers have done with their pension plans: your money goes into a 401(k), as does their contribution; if the plan does well, you do well; if the plan underperforms, well, too bad so sad.
It’s all a giant Ponzi scheme anyway. That money is supposed to be put in trust, but instead it’s being used for ongoing government operations, while the payments are funded with current collections.
Current collections have ALWAYS funded the majority of payments, and that’s the way it was always planned to be from the beginning. However, it has been more than a decade since current collections could fund the entirety of benefits due, so they’ve been cashing in the IOUs in the trust fund. The problem is that all of the IOUs will have been repaid with interest by around 2034, and at that point the trust fund will be empty and current collections still won’t be enough to pay all benefits due.