The Social Security Conundrum

Sorry to hit you with two egghead posts in one day, but there’s a lot of bullshit out there needing to be countered.

The Liberal Echosphere has erupted in response to Alan Simpson’s suggestion that we raise the retirement age. They point out that the rise in lifespan is mainly due to drops in infant and child mortality. The number of years one can expect at age 65 has risen much more modestly.

A man who turned 65 in 2010 has a life expectancy of 83.1 — barely five years more than he had in 1940. Women have increased their life expectancy at roughly the same rate. Since 1940, the retirement age for drawing Social Security benefits has been lifted from 65 to 67, meaning that people are receiving a net of only three extra years of benefits than they were 70 years ago.

First of all, three years of benefits multiplied by millions of seniors is a lot. It’s at least 20% of the Social Security bill.

But second, this ignores something more important. In 1940, far more seniors were poor and disabled then are today. If you got to 65, you were not in good shape. Over a third of seniors were living in poverty and at least that many were disabled. Those numbers are dramatically lower today. In fact, seniors are the wealthiest demographic by age.

The solutions seems quite simple to me (assuming that privatization is off the table):

First, Social Security pays out larger benefits to those who delay retirement. That slope should be made longer and steeper, especially in the early years. Seniors who can’t work shouldn’t be in poverty. But there should be greater benefits to delaying retirement. I would even extend this to dramatically improved survivor benefits for those who never retire.

Second, the program should be means-tested. No one should be cut off having paid into the system. But benefits should be tapered with the principal goal being keeping seniors out of poverty.

Or, we can stick with option three — the one preferred by the Left. We can stick our heads in the sand and pretend the problem doesn’t exist.

Comments are closed.

  1. Rann

    I think it’s a tough thing, really. We pay a chunk of our paychecks, every paycheck, for years and years and years, supposedly secure in the knowledge that it will be there for us at a certain age… and then we’re told “Oh, no, sorry, we need to raise the age. For the good of everyone. Work for a few more years, if you live that long. Then you’ll get it. If we don’t need to raise it again.”

    And here I’m not saying that they shouldn’t. As you say, reality can’t be denied, and the reality is that we can’t just ignore the problem and hope that it goes away, or that it can be solved by raising other taxes and throwing social programs at the wall and seeing what sticks. I just think it’s necessary to acknowledge the full weight of what’s being pondered here, in frank terms. Hell, the franker the better. Because sometimes the most necessary medicine really shouldn’t taste like cherries.

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  2. HARLEY

    you are right WVR, its changed a lot. back then when you retired, you were ually to old and wore out to do much more, other than die.
    The cost of living past retirement is going up substantially, the associated cost of medicines, surgical procedures, none of which were as common then as they are now, are jacking up the cost to SS.
    the largest drain of SS and saving accounts of seniors occurs in the last 3 to 4 months of life, when they accumulation of their life style bites them on the ass and they pay anything to hang on for a few months more.

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  3. AlexInCT

    I think it’s a tough thing, really. We pay a chunk of our paychecks, every paycheck, for years and years and years, supposedly secure in the knowledge that it will be there for us at a certain age… and then we’re told “Oh, no, sorry, we need to raise the age. For the good of everyone. Work for a few more years, if you live that long. Then you’ll get it. If we don’t need to raise it again.”

    Forget the fact that SS was never intended to be the retirement system all seem to now expect it to be, and for anyone other than the few lucky winners of the longevity genetics when it was set up over half a century ago, was intended to take care of the outliers, and focus on the big mistake people made, as this thing got bigger and worse, trusting big government to handle their retirement. Shit, SS is set up as a scheme that if repeated in the private sector would land the people involved in jail. And therein lays the implicit problem.

    There is nothing binding in that promise that when we get taxed come every paycheck. You are not paying money into a bucket that will be there for you when you finally retire. No, you are paying into a fund where government then turns around and pays the current collectors. It’s a pyramid scheme. Oh sure, SS used to run big surpluses. Of course, big government then siphoned them off to grow big government, leaving behind meaningless IOUs, so it could buy votes from the people that vote for a living. SS, as it exists now, is doomed. There are simply not enough workers to support the people that will be collecting from it in the near future unless the government outright decides to confiscate 1/3 everyone’s paycheck. And no, fleecing the rich to cover this isn’t going to do anything but postpone the problem for maybe a decade if we are lucky.

    The sad thing is that we knew this was going to happen back in the mid 1980s. Reagan tried to fix SS in a way that would make it so people would put money away for THEIR OWN retirement as so many now still mistakenly think SS works. It would have cost us only $800 billion over a couple of decades to pay for this change back then, a huge number at the time, but peanuts today, when the cost is ultimately in the tens of trillions. He was demonized and accused of wanting to starve seniors by the party that got votes from those dependant on SS and wanted to keep it under government control. GWB tried the same but a short 5 years ago, with the same lies being levied at him and results. Democrats have only wanted to raise taxes – and that SS deduction we get is a tax despite the fact that they separated it and pretend it isn’t – so they can keep getting the votes in the short term.

    And the current proposed solution – just raising the age when you can collect SS – is nothing but applying a bandaid to the system. We will be back with this same problem a few decades from now as people’s lifespans continue to grow. That is, unless Obamacare finally, despite the fact it is unconstitutional and disastrous, manages to survive and hands government control of healthcare, and they just start culling those expensive old people, as they indicated they would to control costs. The only thing that will change SS is if they make it so we all put our money away for our retirement, with a much smaller tax to have government provide a safety net for the really unfortunate. Of course, that will cost the democrats in particular, but all big government lovers in general, a lot of guaranteed votes and shrinks the power of government, so we can kiss the idea goodbye. Instead we will play games and when the whole house of cards implodes in a decade or so, be grateful when government takes everything over and, in our best interest of course, tells us all what to do. Back in the USSR, gone live!

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  4. captcbleu

    Or, we can stick with option three — the one preferred by the Left. We can stick our heads in the sand and pretend the problem doesn’t exist.

    Kinda hard for the lib progressives to stick their heads in the sand when their heads are up their asses pretending there are no problems.

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