2005 October 14 Friday
Call For Rise In Retirement Age

The editors of the Christian Science Monitor argue for a rise in retirement ages in order to better cope with the rapidly decreasing ratio of nonworking retirees to workers.

In a little-noticed news item last week, the Organization for Economic Cooperation and Development, the think tank for 30 industrialized nations, warned that world economic growth will decline to 1.7 percent over the next 30 years if older people aren't encouraged or allowed to work. If nothing is done, the OECD stated, the ratio of nonworking retirees to workers will nearly double in those countries by mid-century.

This demographic reality usually draws a simple political response: raise taxes or lower benefits, or both. In Congress, that way of thinking has led to stalemate on revising Social Security. Both political parties need to discuss a retirement age of at least 70 for both Social Security and Medicare for the next generation.Better yet, it should index the age requirement to rising longevity so this issue can be done with.

All the Western developed countries face very similar demographic problems due to aging populations. We collectively need to admit that as people live longer and have fewer children they are going to have to work longer.

The number of years spent working could be increased at both ends of the working period. Older adults most obviously could work more years. But also children could be educated more rapidly so that they could enter the workforce at younger ages. Recording of high resolution college course lectures and the development of standard tests for highly quantitative college course subjects could provide opportunity for students under the age of 18 to earn credit for many college courses. This would enable them to finish college years sooner and therefore to enter the labor force years sooner.

Developed countries also need to stop the influx of low skilled and low paid immigrants. People who earn low wages pay less in taxes. Therefore they receive more in benefits than they pay in taxes. Immigration eligibility criteria should be designed to allow in only people who are likely to pay far more in taxes than they will receive in benefits over their entire working lives.

Share |      By Randall Parker at 2005 October 14 11:40 PM  Economics Demographic


Comments
Invisible Scientist said at October 15, 2005 1:10 AM:

If the retirement age is increased, then it follows that there will be less work available for the new generation of college graduates (and high school graduates). Given that the worker productivity is increasing, the French government made a desperate attempt to reduce the official work week so that unemployment is prevented from rising (I agree that this was not a very good idea because reducing the work week interferes with the creativity of top engineers, etc, but for routine work, it made sense for unionized workers over there.) Basically, if the growth of the population slows down or stops, then the fact that increasing productivity reduces the number of work-hours, implies that the retirement age must actually be decreased in order to find new work for college graduates... the reason being that the income of the average citizen (majority!) rises slower than the rate at which the deflationary effects are causing the prices of goods and services to decline. In other words, hard work will not be sufficient for the elderly to save enough money for their retirement without making the younger generation become unemployed.

The moral of the story is that either the government will be forced to subsidize the younger generation of unemployed people, or else the government will be forced to subsidize the early retirees who made room for the younger generation of people to find work...

Hugh Angell said at October 15, 2005 6:38 AM:

In theory asking people to work longer seems a good idea but in practice it gets
more complicated. The DMV clerk who can retire on a state guaranteed defined
benefit pension after 30 years service ( at which point she maybe but in her early
fifties) certainly could stand to spend another decade of two making drivers licenses
but expecting the long haul truck driver whose license she makes to keep on driving
until he is 70 is a different matter.

Construction workers can't be expected to still pour concrete, nail shingles and other
physically demanding tasks much beyond age 60.

I am also somewhat struck by the gender inequality in national pension schemes. Women
live longer and, as a rule, have less physically demanding jobs than men. Yet they are
allowed to retire at the same age ( or even earlier) than men. Now how is that rational?

If the average women will live 6 or so years longer than the average man then surely men
should be allowed to retire earlier or women required to retire later to balance the
actuarial cost and benefits of retirement.

DAN said at October 15, 2005 8:48 AM:

This is a complicated issuw that trquipres much thpught because it effects people at both ends of the age spectrum, currently there is a trmendous bias toward youth. Ask anyone over 50, who is laid off. A personal example a close freiend is a food chemist in So Ca. he hasi 57 and has been out of work for a year he has been told (on the side) that he is too old and should just wait for retirement, with some part time consulting to help bridge the gap. Teachers are almost never hired if they are over 40, extreme need posutuins excepted. IMHO we should have a modest tax raise to get us 40 years intp the future. We can then sort it out By the late 2040s attiudes toward work and the results of lonevity research should be more readily apparent. There is a tremendous amount of social issues that need be dealt with. I do see a modest decline in the growth rate while all this is sorted out.

Zach said at October 15, 2005 8:59 AM:

While I realize it is probably not politically viable, I have often thought that having the minimum retirement age be some function of the number of children the individual has would make good sense. For example, someone with no children would have a retirement age of, say, 72, one to two, 69, and three or more, 67. Hopefully this would tend to put pressure on people to have enough children to retain the replacement level. The only catch might be to have the maximum retirement age for anyone who contributes below a certain amount, so that the underclass can not just spawn large masses of uncared for children to lower their retirement age.

Jorge D.C. said at October 16, 2005 3:23 AM:

All the Western developed countries face very similar demographic problems due to aging populations. We collectively need to admit that as people live longer and have fewer children they are going to have to work longer. The number of years spent working could be increased at both ends of the working period. Older adults most obviously could work more years.

bleh. How about we just admit that we need to end socialism? Socialsecurity/medicare is a multi-generational ponzi scheme. It's BS. The worker to retiree ratio has been declining for 60 years and will not stop declining.

Yes, let's all slave longer so retirees and nursing home patients can have even more time in suspended animation. How about this? Screw your grandma. I don't want to support a round the clock nursing staff so she can take deep breaths and do little else until 100. Medicare is a crushing burden on the taxpayers.

This is another example of a society "making progress" while actually regressing. It's decadent to pour trillions into the elderly population. This is a major component of the modern sickness of the West. The high tax burden placed on young workers contributes to all sorts of mischief like below replacement birth rate levels. And then the nation wrecking immigration machinery kicks into gear in order to import young foreign workers. Socialism rots the core of any healthy nation.

Ironic how the USA's transition to a debtor nation coincides with its Great Society efforts.

Check the floors of any nursing home in the USA. Many of the patients are very much dead - but they are still breathing. The West's infantile inability to deal with death combined with advancements in medicine is producing a very interesting situation that will only get more interesting. The warehousing of our elderly is immoral. When a society throws out any concept of "a burden to society", it is not advancement.

But also children could be educated more rapidly so that they could enter the workforce at younger ages.

This is depraved. The vast majority of jobs are highly unpleasant occupations. At exactly what age do you draw the line, Fagin? Your solution is to put kids to work. My solution is to end socialism and let retirees live on their own savings and let the infirm elderly DIE instead of extending their "lives" at astronomical expense to the taxpayers that is itself a ghoulish and self-centered exercise in false morality.

We are becoming the Darwinian equivalent of a hurd of gazelles who carry their weak around at great expense to all - instead of allowing the hurd to be culled...which is the only way to maintain health in a Darwinian environment i.e. planet earth.

Engineer-Poet said at October 16, 2005 7:03 AM:
The vast majority of jobs are highly unpleasant occupations....

Yes, let's all slave longer so retirees and nursing home patients can have even more time in suspended animation.

So the ideal is a perpetual childhood?  (I'm don't recommend people to seek therapy, but if I did, I would do so here.)

Randall Parker said at October 16, 2005 12:07 PM:

Jorge D.C.,

Let us break this down:

1) If we raise the age of eligibility for government retirement programs then that is like a partial repeal of those programs. Fewer people will be on those programs. Yet you oppose this.

2) If we accelerate education we allow people to escape sooner from government schools. My solution is to allow smart kids to earn a college degree by the time they are 18 or 19 so that as 18 or 19 year old adults they can go work at higher paying jobs rather than washing dishes or other lower paying jobs of the sort I and others did while in college. Yet you oppose this.

There is such a thing called making the perfect the enemy of the good. You want to live in a free market utopia. Well, you can't get that. The best we can hope for is to make things less worse than they otherwise would have been.

Do not make the perfect the enemy of the good. Support policy improvements that have a chance of enactment. A gradual rise in the retirement age is within the realm of the politically possible. Abolition of government support for all old people is not possible.


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