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Myths and Facts about Raising the Retirement Age for Social Security

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Written by Nicole Woo   
Friday, 06 August 2010 16:34

Yesterday's release of the annual Social Security Trustees' Report caused a flurry of media coverage and commentary, including Dean Baker's observation that this year's report predicts much higher future wage growth than prior reports.  In fact, the new report forecasts that annual wages will be 47.8% higher in 2040 than in 2010 (adjusted for inflation).

In the month leading up to the report's release there's been, as CNN describes it, a "red-hot debate over raising the retirement age" for Social Security.  CEPR is helping inform the debate by busting certain myths.

1) MYTH: Since most of us sit in front of computers all day, we can work longer.

FACT: Close to half of older workers have jobs that are physically demanding or have difficult physical working conditions.  Hard Work? finds that over 8.5 million workers (45%) over the age of 58 have such difficult jobs.  Over 3/4 of older workers without high school diplomas have difficult jobs, and over 1/2 of older Latino workers and older workers in the lowest wage quintile have physically demanding jobs.

older-workers-fig1-2010-08

2) MYTH: Since life expectancies are longer, we should raise the retirement age.

FACT: This often-repeated mantra refers to average life expectancies, which rose sharply during the 20th century due to increased childhood survival rates. Social Security and the Age of Retirement explains that once they make it to age 65, workers born in 1999 have less than 5 years more life expectancy than those born a century earlier. And those born in 1999 can expect to work 6 years longer than those born in 1899.

3) MYTH: Raising the retirement age is an alternative to cutting benefits. 

FACT:  Raising the retirement age is a benefit cut, since workers would have to pay more in to get the same level of benefits. The Impact of Social Security Cuts on Retiree Income points out that raising the normal retirement age would hit both lower-income and younger workers harder -- for example, raising it to age 70 would mean a 10% reduction in benefits for workers aged 40-44 in 2007.

4) MYTH: Raising the retirement age would go a long way towards eliminating budget deficits. 

FACT: The amount of savings from raising the retirement age is dwarfed by other policy ideas, such as increasing the income cap for Social Security taxes or a financial speculation tax. See for yourself: the CEPR Deficit Calculator lets you pick various items and shows their effect on the national debt in 2020.

Comments (6)Add Comment
deficit hawks are opportunists
written by Leo Marquez, August 07, 2010 12:14
The deficit hawks are fueled by the main stream medias biased reporting. The RNP is running the show and it doesn't help when Obama inacurately blerbs that the economy is getting better because it is not getting better and according to the graphs the only hope America has is to support the government. The neo-con factions of America are capitalizing on this dilemma. The press, like Noam Chomsky, has been warning America for too long is owned by a small corporate interest and for the first time Americans can't hear the truth. CNN and ABC have traced "tea-baggers" funding back to the RNP. All they need is to make Obama the cause of their problems and make government the problem. The Bush administration was as close as you can get to the market driven economy. He created the mess the Obama adm. is having to deal with. unregulated supply and demand only works in the drug trade. During this recession the corporate giants have repositioned to come out on top.Now t hey confuse the people to believe that the deficit is the worst thing happening and all the while they are making find the problem record profits. When a business begins to lose income you don'tcut-back you find the problem and you reinvest more money to bring in higher returns. America's greatest resource is Americans.Never forget that. The RNP and corporate America say they love America the problem with them is that they hate Americans.
...
written by JBG, August 07, 2010 3:41
"...once they make it to age 65, workers born in 1999 have less than 5 years more life expectancy than those born a century earlier. And those born in 1999 can expect to work 6 years longer than those born in 1899."

About each of those assertions, how could you possibly know...or even have a reasonably confident guess?

I'm basically in sympathy with your view, but I would think the relevant statistic in re raising the retirement age would be, What was the life expectancy of a fifty-year-old in 1935, and what was the life expectancy of a fifty-year-old in 1995? Those questions have the decisive advantage of being answerable.
...
written by PeonInChief, August 09, 2010 10:51
An increasing life expectancy means that infants and children are not dying in large numbers. In many Third World countries 2/3 of the children born in any given year will be dead by the time they would have been 14. Medically advanced countries have far fewer deaths among babies and kids, so average life expectancy increases.
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