US life expectancy flat for third year
US life expectancy flat for third year
Life expectancy in the United States has stalled for three straight years, the government announced Wednesday.
A child born last year can expect to make it to 78 years and 9 1/2 months — the same prediction made for the previous two years.
In most of the years since World War II, life expectancy in the U.S. has inched up —- thanks largely to medical advances, public health campaigns and better nutrition and education. The last time it was stuck for three years was in the mid-1980s.
What does this mean for the future solvency of Social Security? Beats the crap out of me. But it sure casts doubt on all those who preach “demography is destiny” and “we are all living longer so work until you are 70”.
On a more mathy note small changes in input into Social Security models can have amazing effects on output, particularly over 75 year actuarial projections. Tweak some mortality and immigration assumptions and results change dramatically. We don’t even have to go the MJ.ABW. Though More Jobs. At Better Wages would itself have some outsized effects.
A person with a first name not too removed from mine went all in on the following a couple of years ago. Why CBO Changed Its Approach to Projecting Mortality
Much mockery of THIS Bruce ensued. Because “Even the CBO —”
If only life was that simple.
What does the income adjusted expected mortality look like? (i.e. weighting the mortality by the contributions to/payments from Social Security?
P.S. When I saw the headlines I was not sure if I should regard this as good news or bad given recent discussions about increasing mortality for certain demographic groups.
from the link: “It’s not clear why life expectancy has been flat lately, but suicides and fatal drug overdoses probably are playing a role, experts believe.”
You’re the numbers expert on SS, but my instincts are that changes to life expectancy at age 65 is much more important for SS solvency than changes to life expectancy at birth.
Your instincts are wrong, M.Jed.
ALL mortality rates at all ages are important, because those who die early get nothing out of the system. As a “reductio ad absurdum,” assume the case that, perhaps because of war or the nature of work, it was very unlikely that one would get to age 65, but once there, one’s life expectancy was another 50 years. Looking only at the life expectancy at age 65 would make things look bleak for the program, but also looking at all the money expected to be put in by those who don’t make it to 65 paints a better retirement picture for those who do.
Your instincts are quite correct, M.Jed.
Warren is correct that all ages matter, but since people work for about 40 years and are retired for about 20, changes to life expectancy at age 65 have been a larger contributor to the change in ratio of workers to beneficiaries than have even changes to fertility.
Warren your math is wrong. And your historical understanding of mortality. Because Arne is perfectly correct.
Advocates of raising the age for FRA (Full Retirement Age) unwittingly or not are suggesting the key to solvency is lower to middle income workers dropping dead after a lifetime of contributions. That those who die early get nothing matters little, mostly they paid in nothing. The key is to extract every single penny of labor value and then send Boxer the Horse off to the glue factory.
Animal Farm has many, many instructive lessons beyond its satire of Stalinism vs Trotskyism, its fundamental message that in the end it is all about elites extracting value from workers whether Oligarchs or Commissars. The caviar tastes the same.
Warren I read your comment too fast. It actually makes much the same point as mine once parsed correctly. Apologies.
Webb – I know you understand this, so why try to spin it to make a point? The CBO report makes an assumption of what life expectancy will be in 2060. What happens in 2014/15 has nothing to do with that. Today a child will live to an average life of 79.5 years. In 2060 a child will live to be 85 years. The increase from today til 50 years is what is important to consider.
I wrote about the CBO report because it is in contrast to the assumptions used by SSA. SSA has the lowest assumption, CBO has numbers that are in the middle. The SS Advisory board is the highest.
You don’t find it odd that SSA is on the bottom, and the SS Advisory board is on the top?
You left out this information when you commented, why?
Krasting I DON’T know that you understand this, so let me unspin your spin. CBO clearly explains WHY they think mortality will be where they project it in 2060 and it has EVERYTHING to do with trends starting in 2014. Read with attention:
“CBO, by contrast, projects that mortality rates will decline at an average pace of 1.17 percent a year—as they did between 1950 and 2008. ”
If they get that average rate wrong. And early indicators would say that they have, then there is little reason to accept their projection over SSA’s 0.80 percent. Certainly there is zero reason to just dismiss SSA and implicitly assume improvements will revert back in a way that gets the mean to 1.17%. It may, because the one thing we know about the future is that it is unknowable in detail. But none of that justifies you big footing SSA with CBO in the way you did and are doing. It is not like you presented this as “view differ”, instead you explicitly claimed superior authority for CBO. Based on nothing. Except your clear desire to be a contrarian.
And which SSAB projection are you referring to? Because its composition has changed significantly and the new chair of the SSAB is a firm supporter of Social Security. And BTW a high level veteran of both the CBO and the SSA. BK meet Paul Van de Water.
(In the Bush years the SSAB was stacked with ideological critics of the program. They like the Trustees themselves are not and have never really been neutral actors in the way that people who like to say “Even the Social Security Trustees —” would have us assume.)
Sorry screwed up. The new head of the SSAB is Henry Aaron. Also a supporter of Social Security. Paul VdW is a top analyst at CBPP. My mistake.
“. .small changes in input into Social Security models can have amazing effects on output, particularly over 75 year actuarial projections. Tweak some mortality and immigration assumptions and results change dramatically.”
Which is why we should be careful about making changes in the retirement program that make anyone’s benefits smaller — actually, that should be an absolute non-starter — or make anyone pay more now. It’s been a few years since I last made the comparisons, but as I recall through about 2012 or so, actual performance of the fund almost every year over about a 15 year period was closer to the more optimistic Trustees’ scenario rather than the more sober intermediate projection.
I have felt for some time that we should go through at least the upside of another business cycle, since the Chicken-Little date when the Trust Fund surplus will be depleted moves further into the future in good years and gets closer only in lean periods. Over a six year period from 1997 to 2003, that fateful date, instead of staying at 2029 and a mere 26 years in the future, as it should have if the projection were stable, had regressed to 2042, 39 years into the future.
To be sure, the Great Recession has taken a big toll on retirement fund projections, bringing it back closer to 2029. That should slow down if the economy continues to improve, and we still should have plenty of time to make better adjustments if they really look to be necessary.
A one-time infusion from the General Fund might be the best course, and as long as it does not become a regular feature it should not compromise the architecture intended by FDR — dedicating FICA taxes solely to the program, and vice versa, and thereby maintaining citizen “ownership” of the program. A cash infusion should especially be appropriate for the disability program, since that is more vulnerable to higher-than-expected claims than the retirement program.
One thing to remember is that the projections of shortfalls in year X all are based on a projection of what the economy will look like every year over a period of 20 years or so. That is a very tall task.
This.
Bruce Webb, thanks for the smiley.
“The caviar tastes the same.”
Bruce, you may know this off the top of your head or you may be able to direct me to the source but my question revolves around the mortality assumptions. Are those SSA assumptions for the U.S. population as a whole or just for covered workers? It would seem to me that those two groups have different mortality.
““. .small changes in input into Social Security models can have amazing effects”
“Which is why we should be careful about making changes …”
I would say it is why we need to teach people that SS is not static. If we choose to undershoot (an idea I agree with), then we need more smaller changes. I do not trust Congress to change the formula – that is why we need a rule that can be followed regardless of whether we have stagnation or more jobs at better wages.
Little John they have to be for total population. If only because SSA gives those projections for ‘at birth’ when nobody is in the ‘covered worker’ category and at age 65 when most people have or or going to be leaving it.
Similarly SSA defines ‘participant’ whether ‘current’ or ‘future’ as including everybody. Because just about everybody is a potential worker at some point in their life. While ‘past participants’ were by definition workers and are now dead.
And Arne agreed in re ‘static’.
Too many discussions of Social Security are framed in “demography is destiny” terms or assuming a fixed economic model when economic numbers certainly and demographic numbers to a significant degree are dynamically exposed to policy decisions.
Deliberately pursue a policy of full employment driven by a New Deal modeled set of public infrastructure spending and (assuming the current FICA system) Social Security self-funds. Because it is clawing back 12.4% of every direct wage dollar expended and the same amount from any multiplier effects. That is spend $15 billion in a labor intensive project like replacing water systems and a $1 billion + flows right to the Trust Fund.
Same thing with minimum wage. And of course things like immigration numbers are directly controllable, at least on the upside. If the “demographic destiny” problems is a shortage of young workers we know where to get them. Pull up a bus in Central America or a boat in the Phillipines (or a Syrian port) and you can get literal loads of new immigrant workers. And historically a boost in fertility numbers that goes with that.
Income stagnation and the ‘aging of America’ are choices to that degree. Not carved in stone.
“Deliberately pursue a policy of full employment driven by a New Deal modeled set of public infrastructure spending and (assuming the current FICA system) Social Security self-funds.”
I don’t think so.
During the late 90s SS was headed toward what seemed like self-funding because EPOP went up by 2 percent over a period of 5 years. is not just the level, but also the increase which was good for SS. Perhaps full employment policy can get us back to the level we had in 2000, but it cannot cause EPOP to keep growing without diminishing returns.
MJ@BW will help dramatically, but (assuming the current lull is temporary) increasing life spans will lead to continued upward payroll tax adjustments.
Stagnant wages will make payroll increases untenable, but even Intermediate Cost will leave the next generation with more for spending than this generation has. I think that perhaps the best contribution of MJ@BW is that it makes the payroll tax increase easily born and makes it easier to save more for retirement. (Because SS was never intended to be the sole source of retirement income.)