Retirement Age Follies

Brian Beutler has Steny Hoyer reiterating his openness to the idea of a higher retirement age for Social Security benefits:

“Unlike Boehner [who supported raising the retirement age outright], what I said is it ought to be on the table,” Hoyer said. “We ought to consider all options, including raising the age, but there are a lot of other options also that can be considered and I also indicated that whatever we do needs to be done prospectively. And I think all parties agree with that.”

As it happens that puts him in just about the same boat as Boehner, at least with respect to the question of raising the retirement age. Many Democrats support the idea of raising the wage-cap on the Social Security payroll tax to shore up the program indefinitely, and the GOP doesn’t. But there remains fairly strong bipartisan support for considering a higher retirement age, too.

This idea has a kind of fake common sense quality to it. If I said, “how about a modest cut in Social Security benefits for rich people paired with a much larger cut in benefits for the poor” almost nobody would find that tempting. But life expectancy is correlated with income and this is getting truer over time:

In percentage terms, raising the retirement age from 68 to 70 would have a small impact on the expected Social Security benefits of a rich person and a large impact on the expected Social Security benefits of a poor person. It’s very regressive and a healthy share of the fiscal benefit will be lost on the back end in terms of increased disability claims.