Social Security MythBusters

[SPECTRE1]

I noticed the riots in France that occurred from the government trying to raise the retirement age from 60 to 62 and have decided to look deeper into this issue. The general plan of rising the retirement age is based on the premise that people are living much longer.

The increase in life expectancy is cited by politicians to get people to readily accept raising the retirement age of social security, reduction of benefits, or privatization. Images of people retiring at 65, drawing 40 years of social security is conjured up frequently. However, based on my review of life expectancy data that is openly available, this does not seem to be the case.

The significant rise in life expectancy is due to the survival rates of children and young adults, not the elderly living significantly longer, drawing more benefits. You will not live that much longer when you get to 60 or 70 today than in 1950.

You can see from around the start of Social Security, the life expectancy of somebody that is 60 in 1950 versus somebody that is 60 in 2004 has only increased 4 years! The increase is only 3 years for somebody reaching 70 to live ten more years in 1950 versus 13.7 more years in 2004.

The idea that everybody is going to live to 100 and be sitting around drawing on Social Security benefits is a myth. The same diseases of old age such as cancer and heart attacks will kill you just as quick, on top of the obesity epidemic that has countered any advancement in technology from the healthcare industry.

However, you can see a big jump in the 0 years category (child survivability) from 58 years in 1929 to around 77 today, over 19 year jump! Infant mortality rates has decreased significantly, raising the overall life expectancy numbers.

http://www.infoplease.com/ipa/A0005140.html
http://eh.net/encyclopedia/article/haines.demography

When looking at the general life expectancy from childbirth, it has increased significantly from 58 to 78 (20 years). This has resulted from the increase in child survivability rates not the elderly living significantly longer. This is a huge difference; a child surviving into adulthood and old age will pay taxes into Social Security. Furthermore, based on the expected life expectancy tables, they will not collect more benefits by living longer, than a person 60 years ago.

Social Security has a significant unfunded obligation due to the government miscalculating the expected obligation, and not raising taxes on business and individual to cover these benefits. Social Security is funded by the wages you earn up to $106,800. With ratio of executive pay increasing significantly as compared to the worker ages, minimum wage not being increased, and wages stagnating from outsourcing; Social Security has lost a significant base of wages to pay benefits. The cap on wages should be removed for the wealthy and tax rates raised.

Social Security should not be based on the premise on paying taxes and dying before you can collect on any benefits.

 

[thoughtone]

Very little coverage from the US media about the France protests. Americans use to have balls too, no more. Americans have bought into the corporate line to our demise!

 

[SPECTRE1]

How does Social Security affect unemployment?

The government (State and Federal) is paying early retirement Social Security with unemployment benefits for 7 million people, except it is for younger workers. The opposite of what you want...

Wouldn't it be better to reduce the retirement age (full benefits) for Social Security for somebody that has their house paid off, kids already gone to college, than to put younger people on unemployment who will get foreclosed on and dragging the economy further?

People are not living that much longer once you hit 50 than somebody 60 years ago. Quit the scam to avoid the tax increase on the wealthy from Social Security.

 

[SPECTRE1]

http://www.huffingtonpost.com/2010/10/25/jobcreation-idea-no-12-le_n_773391.html

No. 12 in Huffington Post's America Needs Jobs series.)

Looking ahead fearfully to something that may or may not be a problem decades from now, President Obama's deficit-obsessed fiscal commission is widely expected to recommend some form of reduction in Social Security expenditures in a few weeks, with the mostly likely scenario being a benefit cut disguised as an increase in the retirement age.

By contrast, looking realistically at the massive unemployment crisis facing the nation right this minute, University of Texas economist and outspoken progressive James Galbraith comes to precisely the opposite conclusion. He says it's time to lower the Social Security retirement age sharply for a few years, until the labor market rebalances itself.

"We've lost a huge number of jobs. No matter how effective a program we enact -- and the fact is we're going nowhere fast -- we're not going to recreate good jobs for everyone's who's lost them," Galbraith said. "So it makes sense to have some priorities."

Galbraith's priority is jobs for younger people who desperately want to work, made possible by retirement for older people who don't. "People who have good reason not to be in the labor force should be allowed to get out and should be allowed to get out gracefully," Galbraith told the Huffington Post.

Specifically, Galbraith is calling for a three-year window during which workers aged 62 and older could retire on full Social Security -- i.e. the same monthly benefit they would normally get if they retired at age 67. Right now, if you start your retirement benefits at 62, your monthly benefit is reduced about 30 percent -- for the rest of your life. That's a brutal disincentive to retiring early.

Older people who have already lost their jobs and are unlikely to find another would no longer have to continue in a "futile and debilitating search," Galbraith said. And those who are still working but would rather not could retire and make way for a younger person who needs the job more than they do. Galbraith said that would be particularly attractive to people in physically demanding occupations. "Many of the people in those jobs would take the opportunity to get out, if they could afford it," he said.

There are two ways to reduce the unemployment rate. One is to reduce the labor pool; the other is to put people to work. This would do both. Galbraith's idea is not exactly gathering political steam. There's no proposed legislation. Not even any buzz, really. But, he said, "it's something that I've found to be very popular in speaking to working audiences and it's common sense."

Essentially, it's a government-sponsored version of what a lot of private employers do on their own when they want to turn over the labor force: They offer people early retirement. "We both can afford it and should do it," Galbraith said.

The affordability, of course, is a matter of debate. Some of the money would be a wash, with federal funding obligations simply shifting from unemployment insurance to Social Security. Similarly, many older unemployed people who have signed up for Social Security disability benefits would presumably shift to retirement benefits. In both cases, for the people involved, that would mean being able to move off of programs that are both stigmatized and uncertain.

But Teresa Ghilarducci, an economist at the New School in New York, concludes that Galbraith's proposal would be "very expensive. "Ghilarducci told HuffPost she supports the idea, because even though it would cost billions, that money would be very effective as stimulus for the economy. "Studies of the consumer expenditure patterns for the elderly on Social Security show that they spend a great deal of it," she said.

And on the plus side, it wouldn't be nearly as expensive as Galbraith's other idea -- which is to make Medicare available (at a cost) to workers as young as 55. "The idea would be that if you are in your job only because you are desperate to hang on to health insurance, you have an affordable option to move into Medicare at a much earlier age," Galbraith said. "That would appeal to people who are in a medically difficult position."

But covering that population would be costly, and premiums would either have to be astronomical -- or heavily subsidized. (Ghilarducci has an alternate idea, which is letting people to buy into Veterans Administration coverage in areas where there is lots of unused capacity, such as Detroit.)

There's something very humane about a policy that provides jobs for people who really want them, and an out for people who really don't. But Ghilarducci warns that if it ever did get raised seriously, employers would be against it. "Employers would hate it," she said. "The more people they have in the labor force, the less pressure there is on them to increase wages. Employers are upset -- but they are not upset about the unemployment rate. That's the balm."

She also cautioned that not every job vacated by an older person would necessarily get filled. Employers might instead continue trying to squeeze more productivity out of fewer workers. "In manufacturing, they're just downsizing," she said. "And the skills that the older people have when they leave may not be needed anymore"

Galbraith's proposal does stand in stark contrast with the rumored position of the fiscal commission. As he put it: "It provides a concrete alternative to the nonsense notion that we should be stretching out the work lives of older working Americans."

"The last thing you want is for young people who actually need those jobs to have four or five years more before they can find them," Galbraith said. And raising the retirement age would be particularly punishing to the elderly unemployed, he said, "forcing them therefore to scrounge for work longer than they otherwise would, as well as impoverishing them in their old age."

Ghilarducci asked of the commission's members: "Do they think the elderly unemployed can find jobs? Do they think American workers don't work long enough? That they should work longer?"

http://www.huffingtonpost.com/2010/10/25/jobcreation-idea-no-12-le_n_773391.html

 

[BrainChild09]

http://www.huffingtonpost.com/2010/10/25/jobcreation-idea-no-12-le_n_773391.html



http://www.huffingtonpost.com/2010/10/25/jobcreation-idea-no-12-le_n_773391.html

Unfortunately it isn't wise to make policies like this based on what someone thinks is a "morally just" age for someone to retire. We literally are in hundreds of billions of dollars of debt. We don't actually have any of the money we spend right now. We know that we do not have the money to pay Social Security for young people that are working today. How can we say that we should lower the retirement age and therefore increase our Social Security obiligations?

One other thing, no politicans or policy experts are proposing that the increase in the age for retirement be applied to those that are already considered elderly. It would apply to relatively young people in today's workforce and those that will follow them. So this talk about the elderly unemployed having to wait even longer to retire is not a real issue.

 

[SPECTRE1]

Unfortunately it isn't wise to make policies like this based on what someone thinks is a "morally just" age for someone to retire. We literally are in hundreds of billions of dollars of debt. We don't actually have any of the money we spend right now. We know that we do not have the money to pay Social Security for young people that are working today. How can we say that we should lower the retirement age and therefore increase our Social Security obiligations?

One other thing, no politicans or policy experts are proposing that the increase in the age for retirement be applied to those that are already considered elderly. It would apply to relatively young people in today's workforce and those that will follow them. So this talk about the elderly unemployed having to wait even longer to retire is not a real issue.

If somebody leaves the workforce as a result of being eligible for Social Security, that position will be available for somebody else to take, causing a trickle down. Eventually it will remove a person receiving unemployment benefits, into a job. The net effect should be zero in terms of government spending.

The government is spending $60-70 billion a year on extended unemployment benefits, on top of the regular benefits being paid by the state. There is also food stamps, welfare, medicaid, and public housing the government is paying as a indirect result of unemployment that have exploded in costs and use. All the government would have to do is increase the cap on wages subject to social security tax to pay for everything; however, the net difference between increasing Social Security obligations and decreased use of social programs and unemployment should be small.

The preference is to get a younger worker 18-55 into a job to keep them out of foreclosure, and employer sponsored health coverage.

 

[BrainChild09]

If somebody leaves the workforce as a result of being eligible for Social Security, that position will be available for somebody else to take, causing a trickle down. Eventually it will remove a person receiving unemployment benefits, into a job. The net effect should be zero in terms of government spending.

The government is spending $60-70 billion a year on extended unemployment benefits, on top of the regular benefits being paid by the state. There is also food stamps, welfare, medicaid, and public housing the government is paying as a indirect result of unemployment that have exploded in costs and use. All the government would have to do is increase the cap on wages subject to social security tax to pay for everything; however, the net difference between increasing Social Security obligations and decreased use of social programs and unemployment should be small.

The preference is to get a younger worker 18-55 into a job to keep them out of foreclosure, and employer sponsored health coverage.

I hear you. We have some differences about Social Security that I'm pretty confident we'll never agree on so I won't bother expressing my views on it.

I'd just ask you to consider that even one of the economists in the article who appears to support the idea admits that there's no guarantee that most jobs that will theoretically be more available due to an increase in retirements will necessarily be filled by many young workers seeking jobs. Their reasons including a lack of skills for some of the jobs as well as automation and other things that make human labor in some jobs no longer necessary.

Also, we don't know how many 55 year olds want to retire. Sure some do, but I think it's a bit oversimplified to say, lower the age for retirement and their will be a mass exodus of older people looking for jobs. Perhaps a lot of the people currently unemployed will but what about when the younger people turn 55. This plan calls to increase the government's obligations to people while at the same time decreasing the pool in which to collect the money needed to fulfill these obligations. The solution, increase the taxes this smaller pool of people have to pay? That's not a solution so much as a new set of problems to me.

Just my take. Not trying to get into the name-calling back & forth with you dawg. Peace.