Posted on 01/29/2023 9:19:11 PM PST by SeekAndFind
On January 10, the French government announced plans to raise the retirement age from 62 to 64.
The change would mean that after 2027, workers in France would have to work 43 years to qualify for a government pension, instead of 42 years. French workers promptly took to the street in protest decrying even this very small reduction government welfare.
Like many countries in Western Europe and North America, France faces a major demographic problem in that its population is aging and demanding ever larger amounts of public pension funds.
Meanwhile, the younger working-age population is shrinking as birth rates continue to fall. So, the French state is looking for ways to stay relatively solvent.
For Americans who follow our own old-age social benefits systems, this problem will seem quite familiar. Although the US regime is not in as dire fiscal straits as the French one, the US's federal government nonetheless faces huge and growing obligations to current and future pensioners. This will only grow more urgent as the population continues to age and as the numbers of prime-age workers stagnates.
Indeed, the Social Security scheme is an excellent example of how government programs, once established, gradually become far more costly—in real per capita terms, not just aggregate terms—as time goes by. Many recipients now spend decades collecting benefits on a program that had been sold as a program only for people who were too old, exhausted, and injured to work at all. Meanwhile, fewer and fewer workers are called upon to foot the inflated bill.
At the center of this mission creep for Social Security is the fact that Social Security benefits originally began at age 65. Yet, at that same time, the life expectancy at birth was below 65. (It's much higher now.) Many people lived well past 60 back then, of course, but not nearly as many as do today. In other words, a far smaller fraction of the work force collected Social Security, and for a shorter period. Today, however, more workers live long enough to collect Social Security, and they now receive payments for longer. That's a sure way to inflate the cost to taxpayers of old-age benefits. (It's also a sure way to encourage able-bodied workers to leave the workforce, thus tilting the economy more toward consumption rather than production.)
Even if we ignore the moral problems presented by transferring huge amounts of income from current workers to pensioners, the realities of demographics in the twenty-first century mean the minimum "retirement age" should really be at least 75. Too long has a shrinking pool of workers been forced to fund pensioners who start collecting government benefits in their 60s and can now expect to be on the dole for 20 years or more. Moreover, this phenomenon is growing. Social Security increasingly forces today's workers to shoulder an ever-greater burden on their ability to earn a living and support their families. The days of subsidized extended vacations for able-bodied 65-year olds must come to an end, but until that day comes, the damage can at least be limited by raising the age of eligibility.
When it was being sold to the public in 1935, those promoting Social Security took advantage of sentiments that people over age 65 were essentially too old to work, and thus would soon fall into poverty. This certainly would have seemed plausible at the time. Most jobs in 1935 involved significant amounts of physical labor whether we're talking about cleaning laundry, waiting tables, farming, mining coal, or building houses. Work was also more dangerous—as historical work injury data makes clear—and workers were more likely to sustain injuries that would render one unable to work. For example, a 65-year-old simply could not safely perform much of the work required at a steel mill. (As shown in this 1944 video on the steel industry.)
Especially important to efforts at presenting Social Security as fiscally prudent was the fact that with a minimum age of 65, the number of Social Security beneficiaries would also be limited by the realities of life expectancy. In 1940, for example—the first year that pensioners could receive benefits—life expectancy at birth was only 61 for men and 65 for women. Indeed, even if we eliminate the toll of childhood diseases on life expectancy, the numbers do not change dramatically. In 1940, total life expectancy for persons over 15 years of age was 68. Moreover, in 1940 the percentage of the population surviving from age 21 to 65 was only 54 percent for males and 61 percent for females. But what about those who actually made it to age 65? In 1940, a male at age 65 would, on average live another 13 years. A female would live another 15 years. So, when looking at the work force in 1940, we can eliminate nearly half of the men and about 40 percent of the women as likely future Social Security recipients. About half of those who actually made it to 65 would then collect benefits for no more than 15 years.
Now let's contrast that with life expectancy realities in our own time.
Life expectancy at birth today is 78 years, and for those who reach age 15, it is 80. for both men and women, more than 75 percent of the population reaching 21 will survive to age 65. That's an increase of 50 percent for men, and around 30 percent for women. For those reaching age 65 in 2022, males will live another 18 years on average, while females will live another 20 years.
These growing commitments from Social Security are further aggravated by the fact that while the retiree population is growing, growth in the work force is stagnating. Since 1960, the total number of Social Security recipients has increased by 364 percent. Meanwhile, the prime age population (age 25-54) has grown by only 90 percent. Put another way, in 1960, there were 4.6 prime age workers per Social Security recipient. In 2020, that number was 1.9.
Now let's look at this in dollar terms. Per prime-age worker, inflation-adjusted dollars spent on SS amounted to $9,590 in 2022. That's up from $4,814 in 1980, or an increase of 99 percent over the period. During the same period, inflation-adjusted weekly earnings for workers increased 16 percent. Part of this discrepancy is due to the fact SS payments are consistently—as mandated by law—bumped up by cost-of-living adjustments to account for price inflation. Wage workers enjoy no such guarantees.
Social Security benefits are rapidly outpacing both population growth and earnings growth. In the aggregate, the program is more generous (toward pensioners) than ever.
To stanch some of the bleeding from today's workers who get an increasingly raw deal on this, the time has come to stop the ever-upward creep in how much Social Security recipients collect.
As noted above, we see that, on average, men and women collect Social Security for a period that has grown by five years since 1940—an increase of 38 percent for men, and 33 percent for women. To even put a dent in this, the minimum age for SS needs to rise to 70. Yet, even this is much too low given how turning 65 in 2022 is nothing like what it was in 1940. Ever since it was first put forward, Social Security has assumed that reaching the age of 65 is also closely associated with disability. That may have been a good assumption in 1935 when work was more often dangerous, likely to produce disability, and medical care was much less adept at addressing these disabilities.
In 2022, however, the word "disabled" hardly describes the majority of Americans in the 65-74 age range. Indeed, only one quarter of this population reports having any disability at all. The share of Americans from 65-74 who report poor health has been declining, as has the proportion of workers in physically demanding jobs. It's unclear why 100% of these workers would require government income subsidies. In any case, workers who are actually disabled would qualify for disability benefits even if the age is raised. Moreover, a male worker today who reaches age 75 can still expect to live another 11 years. A female can expect to live even longer. Raising the age to 75 still wouldn't eliminate a taxpayer-subsidized "official" retirement, but the change certainly would reduce the length of time today's workers toil in a state of indentured servitude to today's pensioners.
One thing raising the age has going for it is that it's been done before. A 1983 change very gradually increased the full-benefits age from 65 to 67. That's much too little, and even an increase to age 75 would be a mild reform. Other reforms, up to and including abolition, should include means-testing pensions and totally defederalizing and decentralizing the program. But it's also easy to imagine the tidal wave of opposition from activists who vehemently oppose even a very mild reduction in Social Security payouts. Raising the age won't make Social Security just, prudent, or wise. But cutting federal spending is always the right thing to do.
“Social Security benefits are rapidly outpacing both population growth and earnings growth. In the aggregate, the program is more generous (toward pensioners) than ever.”
My mother left some old Social Security contribution forms in a box in the garage. The earnings contribution cap was around $20,000/year.
As the earnings contribution cap soared, the amount of Social Security the high contributors eventually were entitled to soared too.
The earnings cap was around $6600 in 1967.
https://www.fool.com/retirement/2017/01/28/81-years-of-social-securitys-maximum-taxable-earni.aspx
The cap for 2023 is $160,200.
“How about starting with taking everyone off of it that never worked and never paid in?”
Be careful there, there are a lot of “house wives” who may have worked a few years then stayed home to raise a family. When their husbands pass on ... should they not receive any benifit? Especially if the husband dies just short of retirement?
Yes to your question of those who just come here from another country in their 70’s+ who never were part of the system.
How about making social security what it was supposed to be like for retirees only and US citizens only. Maybe cut the bureaucracy by 50% and don’t send $100 billion to the Ukraine.
Good luck do getting a job at 60 much less 70 or older.
One of the reason Social Security was created was the free up jobs for millions of younger workers.
There were millions of people working jobs because they needed “a little extra money”.
Social Security paid out the “little extra money” and people who desperately need jobs in the Great Depression got the vacated jobs.
Many people use their Social Security to pay property taxes.
If the Social Security goes away, either the property taxes pretty much have to go away or the old folks paying them will have to move away.
Instead of paying FICA tax, parents might find themselves paying means-based tuition for their kiddies.
My mom didn’t enter the work force until all of us where at least middle school. ( 7 of us) Of course dad worked but died when he was 55. Mom continued to work full time and dad left her a good insurance policy(40,000) for the time, but the SS came in handy. Doubt we could have paid property taxes,etc without that extra help.
So let me get this straight. Tens of thousands of my hard earned dollars were extracted from me at gunpoint with the promise that when I turn 65 I could begin collecting a pittance of “benefits” that are supposedly “guaranteed” to me by some mythical “social contract”.
Now they want to move that age out 10 years and bet that I’ll die before I get one red cent of the money they stole from me back.
Do I have that about right?
L
One of the reason Social Security was created was the free up jobs for millions of younger workers.
Social Security does have an interesting history. I would encourage all to read a little.
https://en.wikipedia.org/wiki/History_of_Social_Security_in_the_United_States
Implementation
The first reported Social Security payment was to Ernest Ackerman, a Cleveland motorman who retired only one day after Social Security began.[31] Five cents were withheld from his pay during that period, and he received a lump-sum payout of seventeen cents from Social Security.[31][32]
The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont.[33] In 1937, 1938, and 1939, she paid a total of $24.75 into the Social Security System. Her first check was for $22.54.[33] After her second check, Fuller already had received more than she contributed over the three-year period. She ultimately reached her 100th birthday, dying in 1975,[33] and she collected a total of $22,888.92.[34]
This is what the GOPe “leadership” thinks may be a good idea.
I started to retire but after working without a break of more than a few days at a time over 50 years I found out that I was not a very interesting person. I didn’t want to travel, spend time with friends, volunteer etc. so I just kept working.
Actually, I like my work and I am glad to have something useful to do.
This is the biggest and most obvious problem I have with socialism and endless government funded social programs...the math doesn’t work. How can you have all of it with declining populations? It just goes to show that they’re thinking is based on feelings and not thinking it through.
In fairness, Social Security came about in the 1930s only because virtually nobody had any savings at retirement (except for the very wealthy). Before Social Security, you either worked until you dropped or you moved in with your adult children. In fact, our culture back then was such that families were expected to take in aging relatives.
For those who remember "The Waltons" TV show, that was exactly the situation. The grandparents lived with the large family, imparting their wisdom and experience on both children and grandchildren. This was normal back then.
While many people do not do enough to save for retirement today as they could, pretty much everybody knows that Social Security is not going to be enough to provide anything but a very spartan standard of living at best.
For those who do take advantage of IRAs, 401(k)s and other investment vehicles, they tend to set themselves up for a retirement in which their income matches or even exceeds what they made while working, provided of course that their earned SSA benefits are there for them to supplement that income.
Consider a 401k worth a million dollars and you retire at age 65 with a $2,500/mo benefit ($30K a year). From your 401k, you can safely draw $40K a year and never run out of money (provided you have the million to start with).
Now most people would have a very hard time making ends meet on $40k a year in retirement. But combined with the $30K Social Security, they now have a base of $70K/yr for the rest of their lives.
Anybody can make that work. Some may have to reduce their standard of living but nobody will starve in retirment on $70k a year (which will increase with inflation).
Bottom line is that Social Security is still a pillar of most people's retirement strategy. That's why it should never be means tested or reduced for higher income people.
Just because you are a 401k "millionaire" doesn't mean you should be denied Social Security benefits when they spent their entire adult lifetime paying into it.
Too many people are struggling to make raising the FICA tax rate a suitable option.
Benefits have to be adjusted somewhat so the system can continue to meet the needs of older folks. This is best done gradually so older folks can adjust their spending.
Raising the taxing cap may look to be a good idea, at least to Democrats, but the people making higher incomes tend to be older or work in medicine. If a doctor’s FICA tax tab goes up, so will his fees. The older higher income people will retire in about a decade and want their contributions back.
BS. The baby boomer generation will be gone soon enough. Then SS wil have huge supluses for FedGov to squander.
If collecting Social Security is unlikely, Americans might retire young to a foreign country and lose the need to pay American real property taxes.
Add up what you’ve paid in real property tax after the age of 50 and what you are likely to pay if you live to the average life expectancy of a female.
Figure out what you are likely to get in Social Security if you live to the average life expectancy of a female.
Compare the two amounts.
I wonder, as I’ve never seen the statistics, how many people pay into SS and MC for years, die before or just after they start drawing, and then the “trust fund” pays that whopping $250 death benefit and nothing else. The answer to most of America’s problems is less government. Less government means lower taxes, less regulation, etc. The economy would boom and tax revenue would actually increase, as it always has when taxes are cut. Americans better realize that, while necessary for a few things, government very quickly becomes a malignancy that threatens the life of the host. The Federal Government is in need of some extensive surgery.
“The baby boomer generation will be gone soon enough.”
You are correct.
The problem is that by the time they are gone the US will be a third world wasteland—very possibly split into warring regions (literally).
There may well be no “government” to enjoy the windfall.
Better idea: since SS payments are fraudulent, they will still continue to be made to the *recipients*, even if they no longer admit young workers to the system.
So stop enrolling *new* people into SS, while continuing to pay the *recipients* until they are gone.
The big winner? Young people who almost get their paychecks painlessly doubled.
The big loser? The federal government, being deprived of all that money they got by fraud, which they then wasted on unrelated spending.
“the math doesn’t work.”
83 years of monthly checks
Still money in the trust fund.
The math needs adjustment occasionally.
I believe you are referring to the amount of income in which FICA deductions stop. Usually around September or October, I get a sudden boost in my take-home pay because my maximum FICA level was reached ($147K last year - $160K for 2023). It's nice to get that little bump in pay at the end of the year but raising that to your $400k is probably the most painless way to bring more money into the system.
But I would not support that until they (SSA) stop expanding the program in order to send checks to people that didn't earn them (like SSI). That is where we need to start first.
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