A number of Republican lawmakers have recently trotted out the reasons that they favor raising the retirement age for Social Security (which is essentially the most regressive change would-be Social Security reformers could make). Gov. Mitch Daniels (R-IN) said he favored increasing it because young people will start living to 100 by “replacing body parts like we do tires,” while Gov. Tim Pawlenty (R-MN) said that he simply wants to “correlate your retirement…to life expectancy.”
These reasons for suggesting yet another increase in the retirement age, which was also raised in 1983, are quite bad. But according to another advocate, Sen. Richard Shelby (R-AL), raising the retirement age to “perhaps 70 or 72” is actually a “positive thing,” because people are living longer and are more productive:
“To sit here and tell you it’s (Social Security) going to be actuarially sound for all the baby boomers and young people, that’s nonsense,” Shelby said, adding that the Social Security tax would have to be doubled or tripled to fully fund the system for younger people…“But,” he said, “we can do some positive things to prolong Social Security … will we is a different question, isn’t it?”
Shelby’s house-on-fire rhetoric regarding Social Security’s finances is vastly overblown. With no changes, Social Security will pay full benefits until 2037 and close to full benefits (once inflation is accounted for) for decades after that. Minor changes — including adjusting the rate of benefit growth for the richest beneficiaries and modest tax increases — can ensure full solvency for the program for the next 75 years, complete with benefit increases for the most vulnerable retirees.
Shelby, though, would prefer to just slash benefits for everybody to make his numbers add up. Here’s what his “positive” change would mean for retirees:
— As the Economic Policy Institute calculated, raising the retirement age to 70 would cut benefits for the average retiree by 19 percent, which amounts to about $35,419.
— As the Center for Economic and Policy Research found, if current trends in inequality continue, raising the retirement age to 70 would result in those born in 1973 and after having a shorter retirement than those born in 1912.
Plus, increasing the retirement age in response to America’s rising life expectancy ignores the fact that life expectancy gains have almost entirely benefited rich workers. Low- and middle-income workers haven’t seen the same gains.
While, on the surface, it seems logical to react to increased productivity and longer life expectancy by raising the retirement age, those gains should actually allow retirees to enjoy a longer retirement. “We have more than enough money to buy ourselves some leisure time at the end of our lives,” Ezra Klein wrote. “At least if that’s one of our priorities.” It’s clearly not a priority for Shelby.