It’s time for a 21st-century retirement age. If 40 is the new 20 and 50 is the new 30, why shouldn’t 70 be the new 65? The last time Washington politicians tinkered ever so gingerly with the government-sanctioned retirement age, Ronald Reagan was in office and Generation X-ers were all in diapers. Since then, American life expectancy has increased by half a decade and continues to rise — while the “traditional” retirement age (established eight decades ago) has only recently begun phasing up to 67 and the official “early” retirement age (established four decades ago) remains stuck at 62.
There is simply no good reason 21st-century workers should operate under obsolete 1930s-era expectations and 1970s rules. We’re living longer, working longer and, in general, holding down jobs that are far less physically taxing than those of previous generations.
The reasons we should update these relics of our teetering federal entitlement programs are myriad. Demographic, actuarial and fiscal realities demand it. As powerless blue-ribbon entitlement reform panels have warned for years, the number of younger workers supporting Social Security beneficiaries is dwindling. It’s a global phenomenon. The Economist magazine reports that, based on declining fertility rates, “by 2050 there will be just 2.6 American workers supporting each pensioner and the figures for France, Germany and Italy will be 1.9, 1.6 and 1.5 respectively.”
This amounts to a budget-busting wealth transfer scheme whose lousy “investments” cannot be sustained unless basic structural reforms are made. Shared sacrifice means that every able-bodied worker — including federal employees and elected officials — must get with the times. Americans can no longer feel entitled to some 20 to 30 years of subsidized retirement, often collected over the course of many more years than retirees actually spent paying into the system.
Raising the traditional and early retirement ages will mean extending workers’ taxable earning years, fueling economic growth and putting a dent in our unfunded-liabilities crisis by delaying payouts. Some senior citizens’ lobbying groups fret that today’s workforce wouldn’t be able to handle longer careers. Tell that to Betty White or Joan Rivers or Helen Mirren.
More to the point, as domestic policy analyst Andrew Biggs of the American Enterprise Institute observes, “Perhaps the best evidence that future Americans can work longer is that past Americans did: Despite poorer health, shorter lives and more strenuous jobs, in 1950 the typical individual did not claim Social Security until age 68.5. In 1950, more than 20 percent of Americans worked in physically demanding jobs; today only about 8 percent do. While today’s technology-driven service economy places demands on older workers, it is hard to imagine that things were easier when Americans typically worked on farms or in factories.”
This week, after rejecting the austerity measures of his own blue-ribbon fiscal responsibility panel last fall and attacking serious GOP attempts to address the impending bankruptcy of both Social Security and Medicare, President Obama will unveil his entitlement reform package. Yep, Barry-come-lately and his teleprompter are ambling down the grim-rose path. The main feature of the president’s “bold” plan? Higher taxes on the nation’s top wealth producers and earners. Translation: Same old, same old class-warfare cowardice.
For their part, both Republican House Speaker John Boehner and House Minority Whip Steny Hoyer, wary of incurring the wrath of senior voters, have tiptoed, pirouetted and backtracked on updating the retirement age. They’ve promised to put “everything on the table” now — as long as everyone agrees later to kick the can down the road. Again.
As many entitlement reformers have noted, the very first American to benefit from Social Security, Ida May Fuller, collected nearly $23,000 in government pension benefits after paying in less than $25. At the rate we’re going now, my kids and the Obamas’ kids will never see a dime of what they are forced to put in. They’ll already be waist-deep in the red as they enter their prime earning years. A truly modern government pension plan would follow the private sector by moving from a defined benefits plan to a defined contributions system — and by injecting free-market competition to improve returns.
Instead, we are dooming a generation of reverse Ida May Fullers who have no choice on where best to “invest” their automatically confiscated payroll taxes. The dawdlers and demagogues in Washington aren’t “winning the future.” They’re robbing it.
Sign up to the Human Events newsletter