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GRAY MATTERS: Raising the Retirement Age?

SaulFriedman75x75 Pulitzer Prize-winning journalist Saul Friedman (bio) writes the weekly Gray Matters column which appears here each Saturday. Links to past Gray Matters columns can be found here. Saul's Reflections column, in which he comments on news, politics and social issues from his perspective as one of the younger members of the greatest generation, also appears at Time Goes By twice each month.

If the incoming Congress, especially the Republicans, are serious about paying attention to the American people, they could start with a couple of recent surveys, which are about life, health and even premature death.

The first, which shows how little confidence many Americans have in their newly elected lawmakers, found that

"on the heels of the 2010 midterm elections, 63 percent of retirees are not confident Medicare will be there for their children."

Indeed, according to the poll sponsored by Extend Health Inc., a private company which helps Medicare retirees choose health plans, 40 percent are unsure or not confident that Medicare will last through their lives. The rest are confident Medicare will continue to be available, but perhaps in altered form.

But on the downside, 17 percent are unsure, along with the 63 percent who are "not confident that Medicare will be available for the rest of their children's lives." That takes in a good portion of the 70-million men and women in the huge boomer generation, as well as families in their thirties who have reason to worry they will be shut out of Medicare as well as Social Security.

The reasons for the pessimism include signs among Republicans in the new Congress that they wish to cut funds for Medicare or, as the incoming Budget Committee Chairman, Representative Paul Ryan of Wisconsin, has suggested, privatizing Medicare into a system in which beneficiaries will use vouchers to buy private insurance.

In addition, the new health reforms have cut back on subsidies for Medicare Advantage plans and some of them are going out of business. Republicans favor saving Medicare Advantage in order to cut Medicare.

The other survey goes to the heartlessness of Republican efforts to raise the Social Security retirement age from 67 to 70 for if that is successful, millions of working people will be forced to delay retirement as well their enrollment in Medicare.

And the liberal Center For Economic and Policy Research (CEPR) has reported [pdf], with good documentation, that increasing the retirement age will not only be difficult for many who work in physically demanding jobs, but it would shorten the retirements and lives of many of those workers.

Using data based on the census and the Occupational Information Network, the CEPR said that "in 2009, 6.5 million workers age 58 and older had physically demanding jobs, while 5 million workers age 58 and older were employed in difficult jobs” that were physically demanding or with difficult working conditions.

In addition, many of the most physically demanding or difficult jobs were also poorly paid and most were held by Latino workers (54 percent), blacks (53 percent), Asian Americans (50 percent) and whites (43 percent).

Even higher percentages of Latinos and blacks in the most demanding jobs were much older than 58 and would be especially hurt economically by a raise in the retirement age.

The survey found that

"raising the retirement age is particularly concerning for near-retirement age workers with physically demanding jobs. Despite the fact that the retirement age increase is supposed to encourage workers to work longer, many workers would be physically unable to extend their work lives and they would most likely be left with no choice but to receive reduced benefits."

Or, after a life of hard work and paying taxes, they would go on welfare.

But that would not be the worst of it for CEPR found, in a companion survey, that many retirees from difficult jobs don't live long enough to collect benefits. Those who, like Ryan, intend to support raising the retirement age argue that life expectancy has increased and therefore the retirement age should likewise be increased.

Perhaps it doesn't occur to Ryan and his allies that Medicare and Social Security are largely responsible for increased longevity (which still lags behind other nations). Perhaps this will be the Republicans' “death panels.”

As CEPR reported,

"The average length of retirement has increased consistently since the program (Social Security) was started in 1937. However, the increase in the normal retirement age from 65 to 67 that is being phased in...largely offsets the increase in life expectancy. As a result, workers who work long enough to collect their full benefits will see little gain in the expected length of their retirement."

Graphs and charts in CEPR's paper illustrate the growing income inequality and life expectancy between minorities in difficult jobs and the rest of workers, especially those in white collar jobs that are less demanding.

"If the recent trend of growing inequality in life expectancy continues through the next three decades, these workers in the bottom half of the wage distribution can anticipate substantial reductions in the expected length of retirement, if the normal retirement age is increased...

A male worker born in 1973 retiring at age 70 can expect to live a full year less than the expected length of retirement for a worker born in 1912."

The study's conclusion:

"If the normal retirement age is increased to 70 over the next 25 years, as advocated by many policymakers, then the rise in the retirement age will continue to offset most of the increase in life expectancy....The expected years of retirement (meaning the years until death) will be less for the 1973 birth cohort than it was for the 1912 birth cohort."

We reported last August 7 on the book, The Spirit Level, which analyzed the growing income inequality in the U.S. compared to other countries, and the consequences for millions of Americans as they grow older and poorer. Trust the new Congress to do nothing to make it better for the American worker and his/her family.

The CEPR study added this note:

"From the probabilities of death, life tables were constructed based on standard methods as described by Social Security."

The bottom line: The higher the retirement age, the shorter the lives of retirees. That, of course is one way of saving money; widows and widowers don't cost taxpayers and Social Security as much as a retiree who lives a full life and draws a full benefit.

This study dealt only with the consequences of Social Security retirement longevity. But ignored during most of the debate on the subject have been the consequences for the quality of life for workers who also may be denied the protection of Medicare if its age of eligibility is also increased. Many employers have ended pension programs and most Latino, black and poor white workers in demanding blue collar jobs do not have 401(k) savings plans.

Nor do many employers provide good health coverage. And unless the recently passed health reforms continue in force, millions of America's hardest workers at the most physically demanding jobs will remain uninsured and at great risk of illness and high medical costs in their older years thanks to members of Congress who get taxpayer-funded health coverage.

Incidentally, if you wish to learn more about income inequality in the U.S., The Spirit Level is cited in a fine series in Slate called The Great Divergence, by Timothy Noah. And this U.K. site is worth examining.

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"The bottom line: The higher the retirement age, the shorter the lives of retirees."

Isn't this obvious, even without a study? The longer you wait to retire, the closer you'll be to death so of course your life will be shorter.

"Raising the retirement age" is a misleading phrase. It made sense years ago when people had cradle-to-grave jobs with a pension. Now, however, when most U.S. employment is "at will," meaning that a person can lose his/her job at any time for any reason or no reason, the idea that people can "choose" to keep working is silly. You have only to consider Ronni's forced retirement.

Let's start calling this "raise the eligibility age."

Perhaps it doesn't occur to You wrote: Ryan and his allies that Medicare and Social Security are largely responsible for increased longevity (which still lags behind other nations). Perhaps this will be the Republicans' “death panels.”

This is not accurate. Life expectancy has increased in recent years owing to the elimination or reduction of certain infectious diseases that led to premature death among young people and children. Public Health programs, Medicaid and SCHIP, (state childen's health programs) have made the difference in life human expectancy.

I just returned from a Cchlear Implant meeting chaired by a Professor from the U of A and he was telling us of the cuts made this year to his departmant and to the State Commission of the Deaf and Hard of Hearing.

As usual, the poor, vulnerable and disabled suffer the most in budget cuts. The State has also stopped funding organ transplants so the people waiting will die.

God forbid, that the rich should be asked to pay higher taxes. It's always the powerless that get it in the neck.

I don't understand exactly what the percentages listed for Latinos, blacks, Asians and whites in physically demanding and low paying jobs refer to. The numbers add up to 200.

It's another holocaust!!!!

Lots of us who have white-collar jobs also develop health conditions that force us to retire early--not only laborers. There's no way I could have waited for full benefits to kick in. And with no Medicare for several years, I had to use meager savings to pay for health care. Meanwhile, the rich keep on getting those tax reductions! Heaven forbid they should have to pay FICA taxes on their full enormous incomes.

The truth is that the rich often become rich by paying as little as possible for (our) labour and by charging as much as possible for whatever product(s) they make or service they provide. The working/middle classes do not owe the rich anything, including tax breaks. They are very, very good at accumulating wealth and they have far more than anyone could ever need. I say tax the hell out of them!

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