Thursday, June 16, 2005


When to retire

I apologize for my rather long absence from posting. While I would love to claim that I had a very good reason for my break, I was just busy.

I had been hoping to write posting about the impact of the retirement age on the Social Security shortfall, but the American Academy of Actuaries already did, so I will excerpt it below.

Two excerpts I found particularly interesting:

"Ron Gebhardtsbauer, the senior pension fellow of the American Academy of Actuaries, today told Congress that an additional raising of the normal retirement age would reduce the Social Security solvency shortfall by approximately 36 percent... Social Security's normal retirement age recently increased from 65 to 66. Gradually raising it further by 1 month every 2 years would reduce Social Security's shortfall by about one-third."


"increas[ing] the earliest eligibility age from 62 to 65... reduces Social Security's shortfall by an additional 10 percent"

As are many other proposals for fixing Social Security, these are benefit decreases, but I tend to side with the Actuaries, and with others who have proposed this fix. Mortality rates have dropped significantly since SS was first put into place. Since benefits were not adjusted as that happened, we have had a series of de facto benefit increases every year. The proposal would be to more or less match the eligible retirement age so that it matches changes in mortality, keeping the system in synch.

A problem with this proposal is that it does not recognize that people age differently. Some 66 year-olds may be more in a position to continue working than others. To rectify this, I would propose some medical-based conditions (looser than those required for SS disability payments) that would allow certain workers to retire earlier. While this would lessen the effect of this proposal on closing the gap, I have to believe that the gap would still shrink by more than a third (compared to 45% above).

Coupled with other proposals, such as allowing the SSA to invest the trust fund in riskier assets could, this proposal could well close half the gap, pushing the key dates in the Trust Funds' lives decades away.

Thanks for reading.

I see, you want your old man to keep plugging away into old age, unless he has a serious medical condition like "Pining away to see his grandchildren more often."

I disagree with your idea about medical conditions. This concept would be abused right and left. It may not be difficult to decide whether a person is sick or partly disabled, but that does not determine whether they can work. We have no objective way to make this decision based partly on age. And I'm not impressed with the way we now decide who is able to get off the dole and must go to work.

- The old Geezer
The other problem with this is that jobs differ. Unless people have carpal tunnel, a desk job should be easier than a physical labor job. What happens if you take that into account? What happens if you ignore it?

the gnome
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