February 23, 2005

The rest of life pales in significance  

William Saletan has written an article about the retirement age, arguing that it should be dramatically increased based on some comparisons with the state of affairs when Social Security was enacted (the piece has a kind of originalist flavor). The arguments are reasonable, and just intiuitively it makes sense that we should be increasing the retirement age as lifespans increase; but he's missing a major point. Retirement has come to mean something in this society -- it's a whole phase of life now, one that people spend a lifetime preparing for and looking forward to. There really wasn't a concept of retirement at the time Social Security was enacted, since most people worked until they were feeble; you could say that the retirement phenomenon was a huge unintended consequence of Social Security.

This might actually be the sticking point when you talk about intergenerational equity -- not the money one generation is paying to another, but the right (and Americans do see this as a right) to retire and live out our years in travel or consumption or just sitting around watching TV. Each generation pays for the retirement of the previous generation and looks forward to its own, and when we think about progress, the biggest effect middle-class Americans see in their lives is a longer, richer retirement. Is Saletan really going to deny them that?

By the way, I'm not entirely sold on the concept of retirement in its stylized, ideal form as you see it in ads for investment firms. Aren't a lot of older Americans taken by surprise when they get to retirement age and don't know what to do with themselves? I can only provide anecdotal evidence here, but when I was working at Social Security I was amazed at the number of people who contacted us about returning to work after retirement. Folks that age face any number of depressing circumstances, and feeling useless has to be high on the list.

Pamela  {February 23, 2005}

I think maybe what could be driving Saletan's argument is that if we increase the retirement age, people get more time to make and save up money for that retirement time. Today, people live longer than those in the past, and yet we have the same retirement age. This means we enjoy this last leg of life longer. But this intuitively raises the suggestion that the amount of money we have saved or even expect from social security for retirement will run out before we die. I recall a story that my boyfriend told me about a rather wealthy man who planned for his retirement well. He alotted a substantial amount of money for himself to live comfortably until his death. This money was to last him up to about age 90. The problem is that he is now about 95 and has no more money. He is forced to live off of the goodwill of his family. But, how many people could have something to fall back on? Once the money is gone, it seems unreasonable to expect one will just let someone free-load until he/she dies. The point of his story was that we should now plan to be living until 2010. But does working until the current retirement age give us enough time to work to become financially able to support ourselves until this time? Bottom line, if we increase the age of retirement, we are increasing the amount of money we can possibly have for retirement.

barrett  {February 23, 2005}

Our culture encourages you to define yourself by what you do to make money. "What do you do?" is the first or second question asked at parties when people meet.

It's no surprise that retired people who no longer work for a company are at a loose end when it comes time to hang up the shop apron or green visor and enjoy the fruits of their labor in their dotage.

paul  {February 23, 2005}

Pamela -- the fact that people live longer but retire at the same age doesn't necessarily mean they have less money during retirement. For one thing, there's this nifty little program called Social Security that pays out a benefit no matter how long you live, specifically to protect you in cases where you live longer than you expect.

Also, there is economic growth over time, and in aggergate at least that economic growth (or even growth in lifetime wages) exceeds the increase in lifespan (this is actually part of the genius of Social Security in the first place, that it relies on aggregate growth to drive up total benefits rather than for the instance interest rates and related instruments the proposed private accounts would use). So it's actually a bit more complicated than saying we live longer -- even at this crudest level of analysis you have to take into account whether people are richer over time as well.

By the way, isn't that the story of King Lear you just told?

nursinghome  {August 15, 2008}

iwqtjxn xphs aenb orljcu
http://nursinghome.thephphost.net nursinghome

ma449zda  {August 25, 2008}


Post a comment

Remember personal