The Third Rail

I love little tools that let you play with budgets and the NY Times has a great one out this weekend.  Thanks Andy for passing it to me in an email, but truthfully I spent a good chunk of Sunday adjusting my budget instead of helping with dinner and dishes (sorry Kristyle).  I also had a hangover, so that didn’t help anything.

Today’s blog is about two checkboxes that I didn’t check which would have raised the retirement ages to 68 and 70 gradually.  

A couple of months ago, I may have checked these.  After all, average life expectancy continues to grow in the US.  Check out this fun Google interactive. In 1970, it was 70, now, 78.  And many argue that gradually increasing the retirement age means more economic growth.  Plus, France is raising their age (albeit to our current level) and well, it’s $247 billion in my budget game.

But I’ve recently read a couple of things that have changed my mind.  First, there is now good evidence that poorer people’s life expectancies aren’t growing as much as rich people’s.  For the most deprived group, life expectancies for men have grown only half as much and for women, haven’t grown at all since 1980.  Here’s a really great article going into the reasons.

Second, while CEO salaries have increased 6 fold since 1980, the number of firms offering defined pensions has fallen off a cliff as the 401(K) replaces the employer pension as the retirement option.  Since amounts aren’t defined and the 401(K) is at the control of the individual, what this means is that good accounting people will get something at retirement and not so good, well they’re out of luck.

Third, getting a job at age 60 is nearly impossible.  Kristyle’s granddaddy had a great job, he fixed bicycles for Toys ‘R Us, and I’m not arguing that older people don’t make great employees – they do.  And it’s awesome for their mental health. But picking up a nice keep-you-busy job and having to find work to pay bills are two different things. 

Yes, older people can create economic growth and yes, they should be saving and everyone should be getting healthier but ultimately that is why social security was created – because not everyone has the same opportunity over their lifespan to do these things. 

There’s a good argument that at one-time the ratio of workers to seniors was 50-1 and now it’s 2-1 and if that’s the case, I think raising the social security tax should be discussed before we go throwing our Seniors to the lions.  In the end i didn’t have to do either; I balanced my budget without even touching the third rail.