No means testing.
Slowly raising the age.
I’ll put it another way … SS is an insurance … really longevity insurance. Currently a demographic that statistically is making big claims for that insurance relative to their premiums paid, the wealthier knowledge worker group, and other, lower middle class and below, especially unskilled laborers, making fewer longevity insurance claims and particularly smaller relative to their premiums paid.
Does that seem like equity to you?
This thread has some less than useful comparisons of nominal values of funds that are received years apart. Low real discount rates do favor delaying claiming, but even then a dollar seven years from now is not a dollar in hand today.
What alternative methodology do you suggest?
I frequently acknowledge my privilege and my luck (it’s up there next to my name). Much of what I have achieved would not have been as easy without those factors. But they would not have been impossible either, if I had the will and tenacity to achieve them. Because I don’t count my possession of native abilities as inherently unfair.
Each person’s work life and the rewards therefrom are the result of a large number of factors including personal abilities, personal actions and decisions, and external influences, the combination of which is unique to each person. That is what I take the phrase “life isn’t fair” to mean in the context of this thread.
This does not mean that I am opposed to reform of the social security system, either its collection of payments from workers, nor its payouts to retirees. But I do think the OP’s stated goal is, at best, impractical.
What does it matter? That’s how insurance works. All of it.
Which as an aside, is something people don’t really understand about common health insurance. It’s not a health care subscription. And Social Security isn’t an old age subscription either.
The only real way to do what you’re proposing is some sort of UBI for the elderly, and I’m not sure that’s sustainable, much less full blown UBI.
Um no.
You buy auto insurance your rate and benefits are going to based on what they statistically expect they may need to pay out, based on your driving record, your vehicle … You live in certain regions and home insurance is going to cost more and need special coverage for fire, flood, or hurricane, based on actuarially calculated risk of what sort of pay outs. Buy long term care insurance, you betcha rates and coverage will vary based on risk that you will make a large claim over the years. And on. Unless regulations forbid adjusting based on individualized risks of future payout (such as the presence of pre existing conditions) of course insurance rates and/or benefits vary based on the likelihood of you making or not making sizable future claims.
This isn’t the simple solution that it sounds like. Companies don’t want older employees; they cost too much. Without some sort of transition plan (like @Kimstu was proposing), you end up with unemployed and underemployed older workers.
And while an average 60 year old in 2026 is much healthier than one from 1976, the productivity we expect from them is much higher too – blue collar and white collar.
When I was a kid, there were 3 guys on the trash truck. Nowadays there is one and he hauls butt from house to house in order to finish his route. In offices, the execs used to take 3 martini lunches and disappear playing golf. Nowadays you’re on calls and chat 24/7 and squeezing in your work in-between them.
@DSeid thanks for updating. With Claude’s new numbers, it doesn’t seem like such a huge gap: $20k more income for 5 years (or $10k for 10 years).
This is an interesting OP. Normally I’d be all on-board with your definition of equality and would want to close the gap. But for some reason I’m not, and I have to reflect on why that is the case.
But there were efforts and they came with an opportunity cost. You must have spent something like 20 years of working hard at school, 3 years of residency, exams, certifications, etc. While you did this there were experiences you missed, memories not made, opportunities lost.
Yes and no - for individual insurance policies, yes , it will be based on individualized factors except for any that regulations prohibit using , and your rate will almost certainly be less than mine if you are healthier. But for group policies such as employer health insurance , there is not an individual rate based on each individual’s risk of making claims. A person with five dependents pays the same as one with four, and a 65 year old’s premium is the same as a 20 year olds. It’s impractical for SS to work on that sort of individualized risk , where a 50 year old manual laborer contributes at a different rate than a 30 year old office worker and/or an electrician’s benefits are going to be different than an office worker with the same income history.
What might be useful in the future is a change in spousal benefits. Right now, a spouse can receive up to 50 % of the benefit if the spouse was lower-earning or doesn’t qualify for their own SS benefit. Which I’m sure made sense when SS started. But things are different now and that leads to apparent inequities. For example, let’s say my spouse and I have the same job. It’s the sort of job that people get right out of high school , stay at for 30 years and then retire and where everyone with the same number of years gets the same pay and therefore paid the same amount of SS taxes. We have a coworker with the same income/years whose spouse hasn’t been employed for 30 years and was employed for 5 years total. So ( for example) my spouse will get a benefit of $3000, and so will I - but our coworker will get $3000 and the spouse will get $1500. They paid half as much in as we did , but got 3/4 as much in benefits.
Yes there was effort and opportunity cost. I earned my accomplishments in life. And the same effort, the same “god given” talents, native abilities, would not have had the same outcomes if I was not born into the circumstances I was born into. And since I did work to the peak of my “will and tenacity to achieve them” then unlike for @Roderick_Femm if born into a less privileged state it would have been impossible for me to achieve exactly the same. Achieve? Sure. With enough “will and tenacity” … This actually is “a land of opportunity” - it is just very very far from a land of “equality of opportunity.”
Which really starts getting into hijack range?
For this discussion - currently we systematically have higher SES knowledge workers, by virtue of greater life and health spans, make greater claims relative to “premiums”, than do lower SES low skilled manual laborers.
And because life and health spans have increased for those upper SES workers much more than for the lower one, they are potentially spending a greater portion of their lives in retirement relative to their working years.
Like I said- first, remove the cap on taxed wages. Then, slowly raise the age for full benefits.
Today, our trash trucks have just a driver, who doesnt have to get out, the truck empties and puts back the bin.
I thought this might come up.
I can only speak anecdotally, but long before our trucks switched to standardized bins and trucks with a robot arm, the driver would hop out, toss the trash bags in, hop in, speed to the next house. He was one guy and he was hurrying, not walking. When they added the bins and the arm, they just made the routes bigger.
In ye olden tymes, the older guy with the bad back could drive the truck.
I can see why a society might want to ensure that everyone gets a nice chunk of retirement, but I’m not convinced this is the right knob to turn. You would want to find the key indicators (gender, income, occupation, health, etc.)
It does seem that certain occupations do have shortened lifespans. A subset of those shorten the healthspans faster then they shorten the lifespans.
The questions then become:
- Is occupation the most important indicator?
- What is the distribution of occupations?
- How many years are they affected?
Then when all of that is added up, how much of it is already addressed by SSDI (as @Wesley_Clark suggested)?
Do SSDI payments track back to the employers at all? Are employers directly incentivized to improve working conditions? Ideally we improve working conditions to eliminate a heathspan gap – not incentivize it.
Just FWIW 2021 bit -
https://www.congress.gov/crs-product/R44846
The Growing Gap in Life Expectancy by Income: Recent Evidence and Implications for the Social Security Retirement Age …
… In their 2016 analysis, Chetty et al.105 examine IRS income data on individuals aged 40-76 years for the period 2001-2014 to study the association between income and life expectancy. As discussed previously, this study finds that men in the top 1% of the income distribution lived 14.6 years longer than men in the bottom 1% (averaged across years and ages), and life expectancy gaps increased over time. Their most relevant finding for Social Security reform is that life expectancy increased continuously with income and that, according to them, “[t]here was no dividing line above or below which higher income was not associated with higher life expectancy.”106 At increasingly higher levels of income, they report that an increase in income of a given dollar amount produced positive but smaller gains in life expectancy.
Policy proposals that increase the retirement age will tend to skew Social Security benefits toward higher earners. Even if a threshold were adopted that protects very low earners who have experienced little to no longevity gains, research discussed here finds that the positive association between life expectancy and income weakens only around the top fifth of the income distribution.
Women, who on average tend to live longer than men, typically have lower lifetime earnings than men. If a low earnings hardship threshold were adopted to protect low earners from a change in the FRA, this could have the perverse effect of protecting women with a life expectancy advantage while failing to protect many men with somewhat higher earnings but lower life expectancy. Thus, a simple hardship threshold based on low earnings in policy proposals that increase the retirement age will likely not adequately protect all affected by the uneven gains in life expectancy. One potential solution is for proposals to focus on a graduated income threshold that phases out at higher levels of earnings. …
… Adjustments in Social Security benefits for differential mortality provide an option to reduce the gap in lifetime benefits by income quintiles (or shared lifetime earnings quintiles in Reznik et al.) under an increase in the retirement age …
… Mortality adjustments to Social Security benefits might improve the progressivity of the program and reduce the gap in lifetime benefits by income under an increase in the retirement age.
So as politically infeasible as it might be turns out to have been considered.
They do not. Only Worker’s Comp comes back at the employer. Which is exactly why they’ve tried since WC was invented to gut the program.
Nitpick: retirement ages have been updated much more recently than that. 1983 was when the gradual approach was first implemented. In 2016, the ability to “file and suspend”, where the lower earning spouse could start collecting earlier while the higher earner suspended theirs until age 70, was taken away for anyone born later.
That’s been done (see above) though it may need to be revisited.
I’m 66, nearly 67. While my health is not ideal, I expect it’s better than a 66 year old 60 years ago. In theory I’ve got another 20 years to go. I could work a couple more years if I chose - in fact I just started a new project that will cover me most of the next year. Ditto my husband.
I expect there starts to be an exponential increase in health issues, not a steady slide as in the previous few years.
One issue with asking people to work longer in the higher SES groups is skillsets. I’m in IT - and there are lots of technologies out there that I know about but would need fairly major retraining to be able to do.
Real internal rates of return or present values vs real contributions. I wouldn’t call either “alternative”.
Thinking about the proposal more, setting SS retirement age by occupation is not the right approach. Instead of addressing an inequity before it starts, it is trying to compensate at the end.
Address the gap between occupational healthspans/lifespans directly:
- Ensure they have healthcare during their lifetime
- Improve safety and working conditions with through an SSDI feedback mechanism
- Deprecate unhealthy occupations when possible
These are Herculean options, but so is setting SS retirement age by occupation. There is a real danger to making SS inconsistent. If SS becomes more opinionated, then it will lose support and become endangered.
This didn’t click for me the first time I read it, but it’s an important point. Calculations of SS ROI should consider spousal benefits as well.