Social Security and the Myth of Longer Lives
Carla Hanson
Pundits on the right broadly proclaim that since life expectancy has increased, it is a natural conclusion that Social Security qualification age should increase, as well. But once again, their science, and their math, is off.
A cursory examination of numerical data does reveal a sharp increase in American life expectancy at birth from 1850 to 2000, but when life expectancy is evaluated after the attainment of adulthood, the numbers are eye popping. In 1850, average newborns could expect to live into their late 30’s. In 2000, that number had doubled as the newborns could, on average, look forward to life into their mid-70s.
But if data is measured from a rough starting point of adulthood, 20 years of age, the average life expectancy of men and women in 1850 was almost 60 years. By 1940, just a few years after Social Security became law of the land, a 20 year old woman could expect to live to 70; a 20 year old man, 67. In 2000, average 20 year olds could expect to live into their late 70s.
Simply put, the life expectancies of people who had reached working age did not remarkably increase over 150 years. Most salient is the graphic example of the 60 year old male in 1850 compared to his 2000 counterpart. BOTH could expect to live into their 70’s and only since 1980 has that number approached 80 years of age.
Further, in the Social Security Amendments of 1983, Lawmakers increased the age of obtaining full Social Security benefits via a graduated table of implementation. If you were born in 1960 or later, you will not receive full Social Security benefits until you are 67 years old.
If this leaves you scratching your head just a bit, here is a snapshot: A woman who was 60 in 2000 can expect to live to be a little over 83 years of age. Qualifying for full Social Security benefits at 65 ½, she can expect approximately 18 years of Social Security. The 40 year old woman in 2000 would qualify for full retirement benefits in 2027 at 67 years of age. Her life expectancy, (based on projecting the life expectancy table gradient gradually upward in following historical trend lines), would be approximately 85, thus also projecting 18 years of Social Security benefits.
But life expectancy is NOT increasing for some Americans.
For some sub-groups of the American population, there has been a marked decline in life expectancy over the past generation. For both white men and white women who have not completed high school, their average life expectancy has decreased by 4 years since 1990.
“…Researchers said they were baffled by the magnitude of the drop. Some cautioned that the results could be overstated because Americans without a high school diploma — about 12 percent of the population, down from about 22 percent in 1990, according to the Census Bureau — were a shrinking group that was now more likely to be disadvantaged in ways besides education, compared with past generations.
“…the group was now smaller, but said the magnitude of the drop in life expectancy was still a measure of deterioration. “The good news is that there are fewer people in this group,” he said. “The bad news is that those who are in it are dying more quickly.”
Most notable is that lower education levels translate to lower earning capacities, and when these folks do retire, Social Security is likely to be their primary income.
The Simple Fix
After $110,100 in earnings, the taxpayer pays no more in Social Security taxes for the year. That means CEO Mark Parker of Nike, who makes approximately 96k a day, would be done paying into Social Security by his first coffee break on his second working day in January. Social Security’s solvency through the rest of the century could be assured if this cap was cracked or even snapped wide open.
The working class has earned it and deserves it.
We need to let our Congressional Delegation know as much.
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8:13 p.m.
Nov 19, '12
Thank you for the compelling and informative argument. Unfortunately we must as you have done provide common sense factual arguments to the rhetoric of the right. The rhetoric is often designed to keep us from discussing their real goal - how to get the massive numbers of dollars from the SS fund into the pockets of the Wall Street banksters.
You point out one interesting number, the shortened life span of certain individual's. This may be the as yet unrecognized or undiscussed point; we may all live shorter lives than previous generations. As our environment and food supply system continue to become more toxic we may begin to see the actual trend of shortened life spans making this particular argument a moot point.
To the the point, however, fund the Social System as needed. Stop trying to make it the scape goat of political rhetoric. Perhaps stated CEO's and others could use the first 4 days or even a weeks earnings to fund SS and perhaps 4 days of war machine funding could be directed into the SS system providing the guaranteed benefits as promised into the future forever.
5:22 a.m.
Nov 20, '12
Mark Twain stated it best, 'There are liars, damned liars and statisticians.' Regardless the demographic chosen, a decade increase in longevity is a significant increase in retirement payout. The system's funding was just revealed to be unable to meet obligations a full 3 years earlier than formerly projected.
This is a disturbing trend that merely taxing high income earners alone will not alleviate. If anything, totally removing the cap will make the situation worse. Using the Nike executive in your example - lift the cap on taxing and you also lift the cap on their ultimate social security annual payout. That does not fix the system, it kicks the can down the road; again.
True reform will recognize a combined approach of increase taxes and increased retirement age. We no longer have the vast majority of jobs involve heavy manual labor and people can/do work well past what would have been retirement age even 25 years ago.
11:24 a.m.
Nov 20, '12
Kurt,
I am glad to hear that you are amenable to a "combined" approach. Talk of compromise from the other side is refreshing.
That said, the trend that is MOST distrurbing is the ideological refusal of the wealthiest (and/or those that profess to speak for them) to contribute to the greater good of America as a community. Whether a modest increase in highest margin income tax rates, the reassessment of the paltry dividend tax rates, or addressing Social Security via the cap and not age, one would think that the rich are poised as pathetic victims.
Forcing Papa John or Mark Parker to contribute a wee bit more to the common goood will not disrupt their lifestyles. They were able to make it big on the backs, literally, of those who work for little money.
The real trend lines, from 30+ years or Reaganomics, have created more income inequity in this country than in any other industrialized nation on the planet. It is THIS trend that needs to stop, and the mega millionaires can forgoe that 7th garage so that Jimmy, the carpenter, can rest his knees and start to enjoy retirement at 67 instead of 70.
11:36 a.m.
Nov 20, '12
Try getting a job in your 60s. First to lay off and last to hire back. The full Soc Sec retirement age is now 68. How high do you want to make it? The GOP mantra about how low income seniors should suck it up and hit the streets while the 1% get wealthier is what Romney Republicanism is all about.
7:22 p.m.
Nov 20, '12
I'm 67. I was so ready to retire at 65. Every joint hurt every morning. My attention span was fading. People who want to raise the retirement age either haven't got there yet, or have exceptional constitutions. Most of us are tired. Real tired. We want to stop.
7:28 p.m.
Nov 20, '12
My kness thank you, John.
7:32 a.m.
Nov 20, '12
One thing I never see studied is the effect on lifespans of not having (affordable) access to health care over many years' time. Even if the lack of health care access doesn't itself shorten someone's life, it almost always impacts its quality and that person's ability to work. So I would think that raising the SS qualification age and forcing that person to work even more years could easily shorten that person's life by a couple of years or more.
11:21 a.m.
Nov 20, '12
You just named the Paul Ryan GOP plan for retirement. Die younger and impoverished, with no Medicaid to care for you in nursing care.
11:30 a.m.
Nov 20, '12
The obesity crisis is sure to shorten life span for many younger and medium age adults, who will die from diabetes, heart disease, and stroke. Add to that the fact that nearly half of adults facing retirement will rely completely on Soc Sec income for their sustenance and you have even greater need to shore up and not cut Soc Sec. The GOP plans to turn Soc. Sec into a privatized Wall St. managed 401K would be a total disaster for America and bankrupt existing recipients. The defined benefit company pensions of the past have been looted by the corporate raiders and CEOs. Soc Sec is increasingly the only life line for later life for most Americans.
The Paul Ryan Republicans want to take that away. Current exhibit is the Hostess Corp. meltdown where the CEO was given 300% raise while the board moves to eliminate all worker pensions. America voted a resounding NO! to the Bain Equity path to bankrupting America.
12:35 p.m.
Nov 20, '12
Carla, I support eliminating the income cap.
However, there is another basic problem, in which national Democrats are implicated, which probably accounts for Kurt's "unable to meet its obligations" (actually, "fully meet its obligations" would be more accurate) date change.
That is the suspension of the payroll tax. Right now the cap is set at zero.
Reimposing the whole payroll tax at one fell swoop would not be good for the economy, but I think we need to combining eliminating the income cap (and any exclusions for sources or types of income) with incremental restoration of the tax over several years (like 4, or 3 if we wait a year).
7:25 p.m.
Nov 20, '12
Social security is NOT absorbing the loss of revenue. Congress replaces it from the general fund. Of course it adds to the deficit, but it's not shortchanging. Ssi.
7:27 p.m.
Nov 20, '12
Agree with you on all points, Chris. Clearly the stop-gap of the payroll tax cut needs to be addressed, but jumping into that lake without sticking a toe in would shock the system. I think you and I are ready to start negotiations, eh?
2:47 p.m.
Nov 21, '12
So in 1940 ("a few years after social security began") a then 20-year-old woman could look forward to living to 70 - and receiving social security from 65 to 70 or five years. A 20-year-old man in 1940 could look forward to living to 67 - and receiving social security from 65 to 67 or two years. With this expected return those folks were willing to pay a much smaller tax - on a much lower maximum income - than is now required - partly because there were 7 workers paying for one retiree. The numbers are now entirely different - including the tax rate, the maximum income subject to tax, the years of likely benefit - and most telling: the number of workers paying for one retiree.
Something has to give here.
5:29 p.m.
Nov 21, '12
You are right, there are a lot of vaiables and numbers that play into the structure, but there are 2 glaring assumptions made by Social Security "reformers" that need to be addressed beyond the 30 second elevator speech and talk show punditology.
First off, we assume that the designers did not account for both a growing and aging population, and we assume that the existing structure is identical to the 1935 framework.
In 1983, as I mentioned, significant steps were taken to address SS solvency. There were a myriad of other adjustments, but a major piece, in addition to the 2 year uptick in eligibility age for full benefits, was the Payroll Tax increase. Baby boomers, unlike any generation before, begun to pay forward for both themselves as well as their parents.
Additionally, the orignal framers of the SSA took into consideration population and potential longevity increases - forcasting ahead to 1980. In the Old Age Staff Security Report of January, 1935, they projected the US population 65 and older to make up about 11.3% of the population What did it end up as? 11.3% of the population.
You use the comparison of the 20 year old, but I mention that comparsion specifically to point out that over the last 160 years, most increases in longevity were due dramatic decreases in infant mortality. What is a more apt comparison is the longevity of those who have reached 65. In 1940, a 65 year old man could expect to live 12.7 more years, a 65 year old woman, 14.7 more years. 50 years later, the comparable man only gained 2 1/2 years, the woman, less than 5.
What forecasts of the past haven't been able project is skyrocketing health care costs, coupled with dramatic risk factors which dimminsh longevity. While our population of 65+ will hit 20% by 2030, it is unlikely that those 65 year olds will have more life expectancy than their current counterparts.
You characterise this as a system in which something "needs to give," and it is certainly essential that we maintain our Social Security fully for our older population. But I have already stated and stand by the simple fix as I see it. Those of high and moderately high income levels continue to benefit greatly from a system of severe income inequity. Those lifelong lower wage earners, who do not fit at all into the demographic of longer life expectancy, who often earn ther keep by back breaking, knee-grinding work, who are already putting more into the system than did their parents, don't deserve yet another pounding.
1:39 p.m.
Nov 22, '12
Suggestion -- rather than have everyone wait for their supposedly increasing golden years to begin collecting social security, we should make it a tiered system. Those with very low incomes / poverty wages should be able to retire early (say age 62) with full benefits, since the odds are good that they are in the groups that won't live as long. Those who pull down monstrously huge salaries should have to wait until almost 70, since they don't likely need the money, and are statistically likely to live longer anyway. The rest of us could hold the line at age 65 for full benefits. And while I get my say -- I want the cap on social security at least adjusted to take in more days of Mark Parker's paycheck to keep it solvent forever for the lower income earners in America, who have no hope of saving for their old age, and end with nothing but social security.
11:45 a.m.
Nov 29, '12
Congress needs to examine the SSI entitlement and enact further restrictions to those who immigrate here. This was reformed during the Clinton era when Great Society type entitlements were reformed. However, why should US taxpayers be burdened with supporting relatives of new immigrants, too-----who would be able to procure far cheaper services in their own countries? And in these days of internet communications families can stay in touch with their mamas and papas in the Old World, instead of getting them on the dole here. Aunt Zeituni and Uncle Oyango being prime examples.