Working Longer
An increase in the average retirement age from 64 to 68 would save about 20 percent in social security payments since the average number of years in retirement would be cut by about 20%. Similarly, an increase in retirement age to 70 would save about 25 percent in social security retirement benefits. Either change would also add significantly to revenue from social security taxes since workers would be employed for several additional years. Therefore, such increases in age of eligibility for social security benefits would go a long way toward solving the looming social security financial “crisis.”
More on this issue in The Becker-Posner Blog.
People are living longer, and so, collectively we should have an understanding that if people want to work into their 70′s, they are more than welcome to. Where appropriate, referring to workers who work at an office setting, people should be expected to work and work until they drop.
This may be the only solution given that we have over 78 million baby boomers entering their retirement age. If such a large number retires, it will not be sustainable for the nation at large.
It is fair to say that I am one of those people who wants to work until I drop dead. And so, I never fully understand people who say that they want to retire.
As is often repeated, when Social Security was first implemented 78 years ago, people who made it to 65 often didn’t draw benefits but for a couple years. As life expectancies increased, Americans have enjoyed years of additional life — all paid for by younger taxpayers. We need to revisit the original social contract; what was it designed to do? Social Security was designed to alleviate extreme poverty during the last few years of life. It was never intended to be a public subsidy for people’s life of leisure.
Buster you make such a powerful point! Yes, we do need to revisit this contract.
Oh boy. Society is funny at times. I think it makes sense to increase the age of retirement as life expectancy to go up, but also as important is to allow people to control the level of productivity they want to have in society after X number of years. After all, we all know younger professionals out-produce older ones.
Just adjust the retirement age to sex/race life expectancy and reform the current system.
I think this is really interesting blog post that provide important insight as to how to deal with the aging population dilemma every where, not only the US alone.
Roger, I think “Just adjust the retirement age to sex/race life expectancy and reform the current system,” is going to be a politically messy process. Anytime you bring race into policy reform changes, it becomes a very messy process.
It only makes sense for retirement age to increase if life expectancy is increasing. Social security benefits are not to be used for people who want to retire to enjoy the pleasures of life at the expense of others. It is meant to help seniors not fall into poverty levels during the last few years of their lives.
Anthony, the statement “younger professionals out-produce older ones” is correct with a major caveat: worker production in the U.S. slightly increases from the age of 25 to 55, but nonetheless remains relatively stable. Additionally, mean labour productivity of a 60-year-old is comparable with a 15-year-old. Obviously a teenager will be performing less intellectually demanding work than a sexagenarian, so the principle of comparative advantage buffers these older labourers against marked disparities in productivity.
http://www.oeaw.ac.at/vid/download/epc_fent.pdf