Don't raise the age for Social Security retirement, lower it

Demographic shifts over the decades have raised concerns about the future viability of the Social Security system in this country. Those who oppose any public retirement insurance program are not bold enough to publicly come out for its outright abolition. Rather, using the cloak of concern about the viability of the program (even when their math doesn’t add up) they argue the retirement age should simply be raised. In other words, put retirement out of reach for many people dependent upon Social Security. The rational is that since we are living longer we should work longer and retire later.

But as James Galbraith argues this logic is misleading and to the contrary, the Social Security retirement age should be lowered:

… in the first place, "we" are not living longer. Wealthier elderly are; the non-wealthy not so much. Raising the retirement age cuts benefits for those who can't wait to retire and who often won't live long. Meanwhile, richer people with soft jobs work on: For them, it's an easy call.

Second, many workers retire because they can't find jobs. They're unemployed -- or expect to become so. Extending the retirement age for them just means a longer job search, a futile waste of time and effort.

Third, we don't need the workers. Productivity gains and cheap imports mean that we can and do enjoy far more farm and factory goods than our forebears, with much less effort. Only a small fraction of today's workers make things. Our problem is finding worthwhile work for people to do, not finding workers to produce the goods we consume.

In the United States, the financial crisis has left the country with 11 million fewer jobs than Americans need now. No matter how aggressive the policy, we are not going to find 11 million new jobs soon. So common sense suggests we should make some decisions about who should have the first crack: older people, who have already worked three or four decades at hard jobs? Or younger people, many just out of school, with fresh skills and ambitions?

The answer is obvious. Older people who would like to retire and would do so if they could afford it should get some help. The right step is to reduce, not increase, the full-benefits retirement age. As a rough cut, why not enact a three-year window during which the age for receiving full Social Security benefits would drop to 62 -- providing a voluntary, one-time, grab-it-now bonus for leaving work? Let them go home! With a secure pension and medical care, they will be happier. Young people who need work will be happier. And there will also be more jobs. With pension security, older people will consume services until the end of their lives. They will become, each and every one, an employer.

And what about any potential shortfall in Social Security funds to pay for retirement benefits? That’s easy – raise or eliminate the cap on annual income taxed for Social Security so those who draw the most on the system pay the most as Gail Collins argues:

The theory behind raising the retirement age is that people are living longer these days. However, the Americans who do all this extra living tend to be wealthier than the ones who expire before they can cash their first pension check. Right now, only the first $106,800 in annual income is taxed for Social Security. Get rid of the cap, and you will be making the folks who are causing most of the problem pay for the solution.

If there is a problem with funding then fix the funding but don’t undermine the program for hard working Americans who have earned retirement and should retire opening up employment opportunities for the next generation.