There’s a lot of support in Washington, DC for the idea of raising the retirement age. And the case for doing so is pretty clear. Thanks to declining birth rates, the elderly share of the population is projected to rise and this necessarily creates some policy dilemmas. On top of the birth rate issue, we also have the problem of expanded life expectancy. People living longer sounds good, but the trouble is that when the ratio of retired years to working years increases, the ratio of consumers to producers also increases. That means declining living standards, either in the form of reduced annual benefits or higher taxes. A higher retirement age would halt the ratio shift.
Of course a little-explored alternative possibility would be to simply set a “maximum age” so as to prevent any such increase. We could reverse current plans to raise the retirement age to 67, and just cap human life at 80 years. Everyone would get a maximum of 15 years of retirement. This has all the economic advantages of raising the retirement age plus several additional advantages:
— Since life expectancy correlates with income, my proposal does a much better job of safeguarding the interests of the most vulnerable citizens.
— Maximum age would substantially “bend the curve” of economy-wide health care costs, which a higher retirement age leaves almost entirely unchecked.
— Maximum age would allow us to reap major efficiency advantages in terms of retirement planning and portfolio allocation strategy.
— Since health tends to decline with age, capping the number of retired years though a maximum age policy gives you more QUALYs of retirement than does achieving an equivalent retirement length via a higher retirement age.
— By tackling the production:consumption ratio directly on the consumption side, maximum age is much greener than efforts to increase production.
Next time one of the haters wants to deliberately miss the point, I hope he’ll read this post.