2008 August 15 Friday
Actuaries Call For Raising Age On Social Security Retirement

The age of eligibility for retirement with government funded pension should be raised.

Last week the American Academy of Actuaries issued a rare "public interest" statement advocating raising Social Security's age when an eligible retiree receives full pension benefits another two years to 69. (A 1983 law boosted the age gradually from 65 to 67.)

An increase in retirement age delivers a double benefit. First off, people start collecting later and so they collect less money total. Second, since they work longer they pay more in taxes.

"Holding the retirement age constant is a certain prescription for future financial problems," the 16,000-member academy stated. "Raising it to reflect increasing longevity would contribute to solving those problems."

Such a change would be equivalent to about a 14 percent average cut in Social Security retirement benefits.

For a few reasons I think the US government's Social Security old age retirement entitlement program is in worse shape than the actuaries imagine. First off, other demographic changes will lower the earning potential of younger generations. Less earnings means less taxes collected to pay for the retirees. Peak Oil will also cut economic growth and declining oil production will cause a long recession when the oil decline really starts to bite. So the revenue expectations for Social Security seem excessively optimistic to me.

Third, advances in medicine will raise life expectancies a lot faster than the actuaries assume. The advances in microfluidics, stem cell research, gene therapy, and other areas of biotechnology are going to lead to the ability to replace and repair old body parts. Full body rejuvenation will become possible at some point in the 21st century. We will accelerate past the historic rate of life expectancy advance as new treatments reverse the changes caused by aging.

Share |      By Randall Parker at 2008 August 15 11:08 PM  Economics Demographic


Comments
dchamil said at August 16, 2008 6:50 AM:

"An increase in retirement age delivers a double benefit." But not for those close to retirement, I'm sure! This sounds like a remark by someone who is well under retirement age (I'm 70.) If the Feds want to raise the retirement age, the ethical thing to do is to raise it for people just beginning to enter the work force. For the Feds to change the terms of the retirement deal well past the age when a change in saving patterns is possible is outrageous. A private life insurance or annuity company would never be permitted to do this.

Andy K said at August 16, 2008 1:57 PM:

One problem I have with raising the retirement age is that it discriminates against men, who are outlived by women by about 7 years, and also against non-whites, who are outlived by a similar margin by whites. Why have a program that every one pays into equally but mainly benefits white women? Unless these life expectancy rates are taken into consideration, I don't support raising the retirement age.
P.S. This isn't meant to be mean-spirited towards women, I see the fact that they outlive men by so much as nature's reward for having the burden of pregnancy.

Randall Parker said at August 16, 2008 2:12 PM:

Andy K,

One advantage of raising retirement age is that it reduces the total amount of money shifted by government from working to non-working people. That reduces a major source of unfairness that I think outweighs the inter-sex unfairness that you speak of.

As for the inter-racial angle: Keep in mind that whites pay a lot more in taxes than blacks and blacks get a net transfer of wealth from whites to them when all taxes and social programs are considered.

Bob Badour said at August 16, 2008 3:44 PM:
Why have a program that every one pays into equally but mainly benefits white women?

Um... maybe for the same reason we put the women and the kids in the lifeboats... ?

Randall Parker said at August 16, 2008 3:48 PM:

dchamil,

A rise in the retirement age would need to be phased in to give people time to prepare.

As for my age and its relationship to retirement age: Regardless of how old I am if the retirement age is raised then I work longer. My attitude about this is that I'm going to have to work longer anyway. By the time I'm old enough to retire the country's financial shape will be far worse than it is today.

For you as someone already in retirement a rise in retirement age for people 10-20 years younger than you is actually in your best interest. A slowing of the rate of people entering retirement will leave more money to pay your old age entitlements programs.

The US total debt as a percentage of GDP can't grow forever. We need to get people into the work force at younger ages and keep them there longer as they get older. We also need to cut back on the parasite jobs and make more people do productive work.

Randall Parker said at August 16, 2008 3:49 PM:

Andy K,

One advantage of raising retirement age is that it reduces the total amount of money shifted by government from working to non-working people. That reduces a major source of unfairness that I think outweighs the inter-sex unfairness that you speak of.

As for the inter-racial angle: Keep in mind that whites pay a lot more in taxes than blacks and blacks get a net transfer of wealth from whites to them when all taxes and social programs are considered.

Xenophon Hendrix said at August 17, 2008 12:24 AM:
Third, advances in medicine will raise life expectancies a lot faster than the actuaries assume. The advances in microfluidics, stem cell research, gene therapy, and other areas of biotechnology are going to lead to the ability to replace and repair old body parts.

Note that the biotech represents a real increase in wealth. So do other potential advances--photovoltaics, nanotechnology, etc. I suspect we are in for a short-term kicking around, but I would hesitate to even guess what things are going to look like ten years out.

Big Bill said at August 17, 2008 4:33 PM:

Bob. Regarding the lifeboats, standing aside while the women and children go into the lifeboats first is known as the "Birkenhead Drill" among professional sailors.

If one does not protect one's children and their caretakers, the race is doomed. the troops behavior during the sinking of the HMS Birkenhead is an excellent example of white nobility and chivalry. See http://books.google.com/books?id=fh4lJAAACAAJ

Of course, protecting post-menopausal blue-hairs by pushing the retirement age of men to 69 is another issue entirely.


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