Pros and cons of raising the retirement age

Great Debates
1

France raised the retirement age from 60 to 62, and Boehner talked about raising the age from 65/66 up to 70 in the US. I believe other countries facing deficits are looking into this too.

But what about the negative consequences of this:
Higher unemployment - more people in the labor market since people who want to retire cannot. So you have more people fighting for the same number of jobs.

Lower productivity - instead of having people in their 60s retiring and letting 20 year old take their jobs, they stay on. The result is older people who have worse health and higher wages are employed while younger workers who have more physical stamina, lower health/disability costs and more flexibility remain unemployed. This could also cause societal problems (mass youth unemployment usually causes problems)

Desperately poor middle aged people - tons of people find after being kicked out, laid off or fired in their 50s that it becomes extremely hard to find another job. I know several unemployed people in their 50s hoping their savings last until they are 62 and start collecting SS because they can’t find anything. If you raise the minimum age to 65 and full age to 70 you will have tons of people who find themselves involuntarily unemployed through most of their 50s and 60s. What happens to them?

Older workers health - People in manual labor cannot work in their 60s. Its just not going to happen.
The only benefit I can see is more fiscal solvency. But how much will cutting 2-3 years off SS retirement actually offer people? If people collect SS for about 20 years, cutting 2 years means saving 10% of the cost of the program. About $50 billion a year in todays dollars assuming about 80% of SS goes to the retired (possible a bit more since people who would be unemployed might still be working and contributing tax income). But how much of that $50 billion is lost due to lower productivity (due to an older, less healthy workforce)? How much would be lost by all those millions in their 50s who can’t find a job but can’t make savings last until the older retirement age who will need various government programs to support them until SS kicks in? When you factor out the money lost by lower productivity, higher unemployment, more government aid for the elderly who don’t quality for SS yet, etc. and I’m sure the number is a lot lower than $50 billion a year.

All in all I don’t see how this is a good idea. I think the best idea is to raise Rand Rover’s taxes and spend it on ourselves. One man one vote.

2

Old people are not necessarily less productive or take more sick days. I agree with the rest of the post however.

3

Could the answer be found in phasing out SS entirely?

4

You would end up having most of a generation becoming homeless and starving/freezing to death.

Most people have not bothered saving anything towards retirement, depending on social security to pay for it.

5

Up to some time after 1950 in the US, median male life expectancy was actually less than the male retirement age. The result is that most men did not live to retirement age; they either died while still employed, or took early retirement (mostly on health grounds, and mostly dying relatively shortly thereafter). And the result of that is that the social security system paid out relatively little by way of pension to retired men.

Since then, median retirement age has dropped, while life expectancy has risen. By 2005, male life expectancy exceeded the median male retirement age by 13.5 years. That means an awful lot of retirement pension.

Add to that the increasing proportion of the workforce represented by women. I don’t have the figures, but women typically retire earlier than men, and live longer, so they put even more strain on the finances of the system.

The obvious way to relieve this strain is to raise the median retirement age. (The other obvious way is to shoot old people, but we won’t go there.)

The suggestion that people over 65 are too ill/weak/feeble to work productively doesn’t stand up to examination. The reason we live longer is because we enjoy much better health. In the past, people worked through their declining years until they were relatively close to death. No doubt their capacity declined and their work patterns tended to change, but they weren’t typically fired. Employment patterns adapted themselves to the available workforce – as they always will. And I would be pretty confident that a 68-year old today is in better shape to work productively than was, say a 63-year old in 1950.

Yes, there is a cost to adapting employment patterns to include a larger cohort of older workers. But there is also a cost to jacking up social security taxes to keep comparatively healthy older people in unproductive retirement in a way that is financially viable in the long term. And I suspect the latter cost is greater.

The problem is not solved by abolishing social security and relying on savings and investments instead, even if the necessary investments are accumulated over one’s active working life. Whether wealth is transferred from the economically active population to retirees through social security taxes/payments, or through corporate dividends, the cost of providing a dollar of retirement income is the same; it’s one dollar. This is not affected by the mechanism by which that dollar is transferred from the enterprise which generates it to the retiree who receives it. It may be no longer the government’s problem if social security is dismantled, but it remains the problem of the economically active workforce.

The workforce, on the whole, has a large interest in encouraging people who can still work to remain in the workforce.

6

Frankly, your title shows the problem with the current system. The retirement age should be whenever someone has enough money to retire, given the lifestyle they choose to live post-working.

The age of SS collection, though, should definitely be raised. The US budget cannot afford otherwise. It should have been raised before now, which would have given the wave of boomers time to plan for it. Now they feel they are entitled to it based on their perceived contract with the feds, and will whine and moan if we try to fix things.

7

The job market is not a zero-sum game. And it’s a good thing, too, otherwise where would all the extra jobs have come from in the past century when the population increased by a factor of 3.

If young workers are so much more productive and cheaper than old workers, why wouldn’t businesses hire them instead?

8

This is only one lever that would increase the funds available for SS payout.

It would behoove us to discuss the pro/con on the other major levers also, and try to determine the greatest benefit with the least damage, as well as the politically fallout.

As I see it, the top three are:
[ul]
[li]Raise the cap on earnings [/li][li]High earners paying more in. [/li][li]Low negative impact overall. They can afford it,…yes they can, really.[/li][li]Politically aware donor group affected.[]Raise retirement age[/li][li]I gotta keep working? DAMN! This sucks![/li][li]Medium negative impact. As discussed already.[/li][li]Politically vocal group affected.[]Raise minimum wage[/li][li]More wages below the cap means more into SS. [/li][li]Possible net neutral affect, if all the inflationary arguments against raising minimum wage hold. [/li][li]Politically positive for low wage earners, negative for business owners. Coin flip.[/ul][/li]
In the absence of hard numbers on each of these, I say move a small increment on each. Raise the cap on earnings 10%, retirement age 1 year, and raise the minimum wage $1. Call it the 10-1-1 plan.

9

Well the company already has older workers on the payroll and can’t replace them with younger workers without first coming up with a way to terminate the older workers without getting sued.

10

In an “at will” state it’s not at all hard to come up with such an excuse.

11

Depending on the laws of each state, they may not even need any excuse. Still, it’s an easy thing to have “a business downturn that forces layoffs”, or for a person’s appraisals to “magically” become bad appraisals during the last year or two.

12

All your negatives are based on false premises. (Some of them might have some degree of truth, but simply asserting them doesn’t prove that.)

Higher unemployment - the number of jobs isn’t fixed

Lower productivity - actually, greater production would be one of the advantages. Were you thinking average productivity was critical but aggregate productivity is irrelevant?

Desparately poor people - more work and production will increase wealth. Not obvious why that necessarily leads to more poor people.

Older workers’ health - there’s plenty of jobs old people could do. People who can’t work wouldn’t work. People who can work shouldn’t expect other people to pay them not to just because they don’t want to change job. (That’s ‘shouldn’t’ in the statistical sense, not the moral one).

It’s all hypothetical anyway. No matter how strongly you believe that you are entitled to a fat pension from the state, and no matter how you vote, governments are not going to be able to pay state pensions to everyone for ‘about 20 years’. Unless you are already over 60, best get used to the idea of working as long as you are capable.

13

Explain how lowering the rate at which workers leave jobs thru retirement creates additional jobs.

14

Except that the Age Discrimination in Employment Act is federal…

15

The SS retirement age in the U.S. for people born in 1962, like myself, has already been raised to 67. I don’t know why more people don’t realize this.

16

I thought one of the issues with Social Security was that the population is trending older meaning that there will be a smaller workforce supporting a greater number of retirees. If this is the case, then you’re not taking away employment from anyone by extending the retirement age, because no one is waiting in the wings (assuming normal unemployment rates rather than the recession/recovery/whatever the hell we’re experiencing right now).

As for lessened productivity, assuming that people are living longer and enjoying better health (one reason that SS is in the mess it’s in now), a few more years probably isn’t going to make that much of a difference. This is obviously job dependent – I expect to hang on longer as someone who sits in front of a computer all day than someone who’s toting 80lb bags of cement around a sweltering construction site all day.

17

This site shows current SS retirement ages. http://www.socialsecurity.gov/retire2/agereduction.htm

They seem to be making a distinction between “receiving benefits” and “retirement.” It is my understanding that SS was never meant to be a retirement system, so anyone who plans to retire on social security is doomed to disappointment. Any payment I get from them will be gravy.

They have been raising the SS retirement age for years, as they should IMO. It is pretty obvious that they need to move the age up over the years to make the system work. But it isn’t easy to plan things out 50 years into the future.

To all those who say the baby boomers are going to eat up all of the SS money. You are technically correct I guess, in that our large numbers will consume all the available resources if nothing is done. But our generation has supported the richest group of elderly people in history - our parents - for the past 30 years or so while they’ve enjoyed 20, 30, even 40 years of fun, travel and topnotch medical care. We wouldn’t mind getting a little bit of retirement too.

18

Raising the retirement age has a higher impact on the poor / uneducated / lower class. People who stand all day, work a manufacturing line, or engage in other types of manual labor. Aging has an impact on them that is not felt as much by people who drive a desk.

Make me work another few years - minimal impact. I will just need better glasses or a bigger monitor. Maybe upgrade my the chair behind my desk to be a bit softer and more ergonomic.

Make my gardener work another few years - gonna get harder for him to use the rake, weedeater, mower, etc. He might just have to stop working and hope he can get along until SS kicks in.

19

I hate to tell ya this, but for some of us, it’s already been raised to 67. I don’t really know how or when this happened, but imagine my surprise when I opened up my annual statement from the IRS one fine spring morning to discover that I was suddenly committed to working a few more years than I’d originally agreed to.

I was pissed off that this happened, there was no vote, and nobody asked me. Just, open the mail and poof! I’m now working two more years than I’d planned to.

And now, I assume that TPTB will again not give a shit about the little person and I will be committed to working three more years than my original commitment. (I’ll work until I’m 65 and then you can all fuck off.) :mad:

I don’t really care about the pros and cons; what I do care about is being in control of my own choices… So if there is going to be a change, I would like the OPTION to CONTROL my own CHOICE, thankyouverymuch.

I know, controlling your own choices is just too much to ask in this day and age’s nanny state.

20

Actually, you could have easily controlled your retirement, by making different financial decisions over the past 30 years. Then, you wouldn’t be dependent on SS for retirement, and you could retire whenever the hell you wanted to.