I’ve been hearing talk lately in both Canada and the US that one way to solve the looming financial crisis in government pensions and entitlements for seniors is to raise the retirement age above 65.
The argument in favour is that we live longer and can work longer.
I say that’s fine if you are a white collar person, and you don’t notice your age much but what if you are a blue collar worker with some grunt labour as part of your job. For example a construction worker bent over all the time tying steel.
I’m only 60 and already I’m stiff as a board after relaxing for more than 15 minutes.
I can’t work as fast as I used to which might explain why I’m not really employable. Fortunately I get by being self employed but there’s a lot of guys my age being laid off who can’t seem to find work again. A lot of people are hanging in there for the 65. You want to make them wait a couple of more years ? In Canada, plenty of people are taking a 30% cut in the Canada Pension Plan (not Old Age Pension, a separate pension) to start benefits at 60 rather than 65.
Its true though, that a lot of people are quite comfortable continuing to work beyond 65.
If they don’t need it why pay it out? The government retirement money is not really a lot. but the government could save a lot of money if older people who elect to work to raise their annual income or people with other annual income forgo the government benefit.
The government pension income should really be a guaranteed annual income for seniors . Wouldn’t that solve the crisis?
You really don’t need to raise the age, raising the cap or the tax rate in the US would do it.
The biggest issues I have with raising the age are what you describe, the inability to find and keep work as you age. In the US discrimination tends to start at 40, by the time you are in your 50s you will have a very hard time getting back in the market. Expecting people to work until 69 is not realistic. Either you aren’t healthy enough, or nobody will hire you. But sadly the laws are written by white collar workers with amazing health care, so they either don’t understand or don’t care what its like to be a blue collar worker with shitty health insurance.
Here in the US, Simpson (who is in charge of the commission) constantly confuses lifespan with life expectancy, assuming that since fewer people die in childhood that means we live 30 years longer in retirement. You can’t have intelligent reform when someone can’t figure out basic stuff like that.
So I don’t know. My generation already has seen ‘benefit cuts’. The tax rate is far higher than it was a few decades ago, our age is 67 for full benefits, I believe the benefits rise slower than in the past, etc. So we are already paying more for less.
If the retirement age was set 40 or 50 years ago and people’s lifespan (and working lives) have lengthened and with fewer children picking up the Social Security tab I’d agree as a general principle. 65 is not a law given by the Almighty, sooner or later it will become ridiculous.
It wont work. Who the heck would hire a 70 year old ?
Where currently are there 10 million available jobs that 65 year olds would all be hired for? Exactly where are all these job openings?
Besides, there is actually nothing wrong with “Social Security” itself… if we get rid of SSI, ie the welfare part, (people who did not pay into Social Security but who Social Security gives them money) . End the SSI program, and also stop paying people who are not US-Citizens.
Alan Simpson, the ex-senator who is a co-head of a panel to reform social security doesn’t comprehend that life expectancy at birth is not the same thing as life expectancy at 65. It is like hiring someone to reform the health care system who doesn’t understand the difference between a physician and chiropractor. He contantly talks about how life expectancy in the 1940s was about 20 years shorter than it is now, but that is life expctancy at birth, not life expectancy at 65. Life expectancy at 65 has only gone up 5 years while SS full retirement age has gone up 2 years.
Life expectancy at 65 has only gone up about 5-6 years, and those gains are not equal (they tend to go more towards wealthy people). And the age to qualify has gone up 2 years. So we aren’t really living longer. A person who collects SS in the 40s might collect it for 14 years, a person who collects it now might collect it for 17 years. We really aren’t living much longer as geriatrics than we were in the past.
When Social Security was first passed, the retirement age was about 65. The life expectancy for men was 58 and the life expectancy for women was 62. BUt a lot of this was due to child mortality.
53% of men and 60% of women who reached 21 were expected to reach 65 and collect benefits for 12 and 14 years, respectivley.
in 1990, those numbers were 72% for men and 83% for women. They were expected to collect benefits for 15 and 19 years respectively.
The total number of beneficiaries has increased 7 fold since 1940.
So as a result we now pay 7+% employee side and 7+% employer side in social security tax and if we got rid of the cap we would solve most of the solvency issues we have with social security. Social security is not medicare, the costs are containable.
Because the benefits payments correspond to the contributions.
If you remove the limit on contributions then the limit on benefit payments also gets unlimited, meaning that some high paid workers would end up getting SS checks for hundreds of thousands of dollars. Do you have any idea how big a SS check Bill Gates would be getting if we removed the limits on SS?
The current retirement age is an outdated remnant of an agricultural and industrial economy which required physical strength for their jobs. However now with a service economy, physical strength is no longer necessary for most jobs and indeed in many jobs experience counts the most. So yes, I believe, the retirement should gradually be raised.
The only argument I’ve ever heard for raising the retirement age in Canada is that everybody else is doing it. The CPP is solvent and will remain so for, at minimum, something like 75 years. As others have already said, arguments involving life expectancy are meaningless unless they look at life expectancy at the retirement age. If more people are living into their 50s, for example, that is a good thing for the CPP: they collect more contributions that way.
The problem is by the time you are in your 50s you likely have major health problems that can limit your ability to work, and you are far less likely to be hired by a company esp in an economy like this one. There are tons of people in their late 50s who have trouble working and nobody will hire them due to their age and health, they are just trying to hold on until they hit 62 and can collect discounted SS. Asking them to wait until 70 instead will create major problems.
If we raise the SS age we also have to find ways to ensure most people are healthy enough to work well into their 60s, and that companies are willing to hire them.
I assume that is the same chart you used earlier. The % who are 21 who survive to 65 has gone up about 20% since 1940, from about 57% to about 77%. But I have no idea how much strain that would put on the system. It is surprising to find out that even by 1990 medical standards only 72% of men who are 21 will live to be 65.
As mentioned by Damuri Ajashi upthread, it also matters that more people now live to retirement age after they start working and paying into SS…it used to be that more workers corked off before they started collecting a pension, and a good many of those were in their late 40s and 50’s, so had payed in a lot. Now about 50% more male workers and about 1/3 more female workers live to retire.
That goes to the economics of the argument. Life expectancy just from retirement age goes to the “fairness” and the economics both.
I suspect our vision of working will have to change.
I’m in my mid-40s and probably at or near the peak of my career. My kids will leave home in less than ten years. At that point, I can downsize my life and get rid of a lot of expenses. That enables me to move to semi retirement. I no longer need the certainly not physically demanding, but fairly stressful and intellectually demanding job I do. I won’t collect SS until I’m 67, but the last ten years of my career, I can pay my bills pouring coffee at Starbucks- as long as I have health benefits through work.
Generally, the period in time between when people’s kids leave their homes and they retire is a time when they have a lot of disposable income. Changing that equation to either use those years to fund an earlier retirement, or use those years to slow down what you do for income, isn’t a horrible idea.