[tabi] article on the health of Social Security and retirement

  • From: "Chip Orange" <Corange@xxxxxxxxxxxxxxx>
  • To: <tabi@xxxxxxxxxxxxx>
  • Date: Fri, 24 Sep 2010 17:35:39 -0400

I know a lot of blind people have a very direct interest in the health of the 
social security system, so I decided to post the short article below.


Allison and I plan to retire in a little over two years, when we're 51.  This 
article addresses those who have plans such as these; as well as those who have 
concerns over the social security system.







Lower retirement age to 50-something 

By Chris Farrell, Special to CNN 

September 22, 2010 3:27 p.m. EDT


* Chris Farrell: "We can't afford early retirement" is alarmist; there's no 
Social Security crisis 

* Farrell says public and private pensions depend on economy's 2 percent steady 

* Mandating older retirement is a step backward, he writes. Wealthy societies 
don't do that 

* The goal should be giving people freedom of choice in the last third of life, 
Farrell says

Editor's note: Chris Farrell is economics editor for Marketplace Money, 
American Public Media nationally syndicated public radio personal finance 
program. An award-winning journalist, Farrell is a regular contributor to 
Marketplace Morning Report. He is chief economics correspondent for American 
Public Media's documentary unit, American Radio Works. He's also chief 
economics correspondent for Minnesota Public Radio. Chris regularly writes for 
Bloomberg BusinessWeek. 

(CNN) -- "Grow old along with me! / The best is yet to be, / The last of life 
for which the first was made." Robert Browning, 1864

How quaint Browning's celebratory ode to aging is these days. Americans seem 
gripped with dread about an aging society. The alarm "we can't afford it" is 
ringing loudly all over the place, from congressional hearing rooms to 
corporate boardrooms to policy think tanks.

The reason for the alarm is the federal government's rising tide of red ink. 
Retirement looms for the roughly 76 million baby boomers born between 1946 and 
1964. The oldest members of the Woodstock generation could start collecting 
Social Security in 2008 and they'll be eligible for Medicare next year. And the 
core of the federal government's long-term debt-and-deficit problem is 
entitlement spending. 

Yet the widespread perception that Social Security, the oldest entitlement, is 
a basket case is deeply wrong. (In sharp contrast, health care spending is the 
driving force behind the scary budget projections.) There are looming financial 
concerns, but they're manageable from an economic point of view. 

There is no crisis. For one thing, when it comes to Social Security, and all 
public and private pensions for that matter, what really matters is the health 
of the economy. For example, the future Social Security tab is easy to meet if 
the U.S economy continues its average annual per capita growth rate of around 2 
percent, which it has for the past half-century or so.

Read the opposite view on retirement age 

For another, the real Social Security concern lies with the consensus on how to 
shore up the system's finances: Raising the age of retirement to, say, 70. It's 
the signature change that has gathered around it as close to a bipartisan 
consensus as is possible in today's fractured politics. 

Average life expectancy, so goes the argument, is about 78 years. That's way 
above the average expectancy of 61 years when Social Security became law in 
1935. We're also healthier and better educated. Therefore, we're told, it's 
feasible for most Americans to work longer and the change will relieve some of 
the system's long-term financial pressure. What's not to like?

Everything. Mandating that folks retire later is a big step backward. Before 
the 1950s, retirement was for the rich. Most elderly Americans needed to earn 
an income and work was often hard to get. Yet with Social Security, and 
Medicare in 1965, a majority of aging workers could look forward to a period of 
fulfillment at the end of their working lives. It was a major social and 
economic achievement of the 20th century. The richer a society becomes, the 
more people spend on health care, education, leisure and, yes, early 
retirement. That's what wealthy societies do.

This suggests that the public policy goal should be to lower the retirement age 
to, say, 50-something. Again, that's an age of retirement only the rich can 
afford. Why not create a comparable option for everyone?

It sounds crazy, doesn't it? The idea is well outside the mainstream. But too 
much of the discussion about Social Security has taken a narrow bean-counter 
view of the system. The goal of reform should be to make the system better by 
enabling people to enjoy greater freedom of choice in the last third of life. 
Now, the choice may be work, full-time or part-time, paid or volunteer. It 
could mean learning more and heading off on various adventures. For many people 
it might involve nourishing their spiritual well-being and making a difference 
in their community. 

"Today, ordinary people wish to use their liberated time to buy those amenities 
of life that only the rich could afford in abundance a century ago," writes 
Nobel laureate and University of Chicago economist Robert Fogel in "The Fourth 
Great Awakening and the Future of Egalitarianism." "These amenities broaden the 
mind, enrich the soul, and relieve the monotony of much earnwork."

Fogel offers up a possible blueprint for accomplishing the goal of an earlier 
retirement. The transition might take several generations. It would require 
that everyone save when they're younger -- a universal mandatory savings 
requirement. Yet under very reasonable economic growth assumptions households 
that were required to set aside nearly 15 percent of their annual income into 
retirement savings would be financially free to pursue their passions in the 
mid-50s. For low-income people, he recommends boosting their savings with a tax 
of 2 or 3 percent "applied progressively to the top half of the income 

There are other ideas that would accomplish the same goal. Fogel's is one 
possible blueprint. To be sure, in these times it's hard to imagine that the 
economic resources are there to finance early retirement. But America remains 
the world's wealthiest nation. Social Security reform should build on economic 
opportunity, not embrace penury. We can afford it and, yes, the best is yet to 

The opinions in this commentary are solely those of Chris Farrell.


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