CBO LTO for Social Security
Under CBO’s ‘Extended Baseline’, i.e. roughly Current Law the 75 year actuarial gap is up to 1.6% from 1.3% and the date of Trust Fund Exhaustion moved back from 2043 to 2039. Under the ‘Alternative Fiscal Scenario’ the corresponding numbers are 2.1% and 2037 or right in line with the Social Security Trustees 2009 projections. Meaning that the NW Plan as currently formulated would handle even CBO’s more pessimistic projection. The sky is not falling and contrary to some people’s calculations the Trust Funds will not go to zero by 2012.
And while the percentage of GDP that will go to Social Security is projected to increase from 4.8% to 6.2% under both alternatives this has to be (or at least morally should be) balanced against the fact that the percentage of people eligible for retirement will grow from 22% to 35%. Unless someone would care to make the argument that older people should ipso facto get a smaller share of productivity per capita in the future than they do now this hardly seems unreasonable.
Bruce
couple of points:
the way the Northwest Plan is structured, it CAN’T change much. That is, the future costs of Social Security CAN’T change much because of any temporary economic conditions. Nor are there any long term conditions that are imaginable that would change it much. One point of the Northwest Plan, beyond showing a simple way to “balance” the Social Security budget forever, was to show that the hysterical reading of the numbers by the Petersons and every simple minded person who believes them, is NOT in fact what the numbers show. The numbers show there IS NO CRISIS and NEVER WILL BE A CRISIS.
The most that a new calculation of the Nothwest Plan under current predicitions will show is a slightly earlier date for the tenth of one percent corrections that the Plan recommens “at need.” This can have no effect that anyone will “feel,” and none that any sane person would even notice, absent the hysterical propaganda by the Petersons.
The Petersons get their huge deficit predicitons by assuming that we never adjust the tax that tenth of a percent from time to time and just borrow the money. The Trustees put it a different way. They “show” that the “funding gap” could be closed forever IF ONLY we had 15 Trillion Dollars to put in the bank today at 5% interest. Well, that is not the way I manage my grocery budget. And all Social Security is , is your grocery budget for after you retire. Pay as you go. Sufficient unto the day is the evil thereof. Give us this day our daily bread. Honor your Father and your Mother. Those old guys weren’t mouthing stupid superstitions, they were trying to tell the people something that would preserve them from folly.
Which brings us to the 6% of GDP. Are we so insane that we think 6% of GDP is too much to pay for feeding and housing the elderly? Are we so stupid we can’t “set aside” that much of our own money to pay for our own expected 20 years in retirement? Are we so stupid we can’t understand that “pay as you go” is the way we finesse inflation. It is NOT “the young paying for the old.” Except of course it is. Is that too hard to understand? That we pay for ourselves by paying for our parents, as our children will pay for themselves by paying for us.
You see, it’s hard to save bread for forty years. And even harder to save gold.
The NW Plan is structured in such a way that it can be adjusted each year in ways that are almost imperceptible to the worker faced with paying the taxes. My point was that the NW Plan ver. 2009 which was targetted at the mid-point of the SSA projections still holds up even at the pessimistic bound of CBO.
Based on what I am seeing here I expect that 2010 SSA IC will probably project something like a 2.3% gap which in turn will require some mild adjustments to produce NW Plan ver. 2010, but in any event the NW Plan is sufficiently conservative that it is pretty robust on the downside of current year performance.
Bruce and coberly,
Well I’ve been going around looking at other sites talk about this report. Reguardless of their position on the report or what we should do or not do, they consistantly seem to make two mistakes (which I keep seeing in our SS discussions here).
First they assume that payroll tax is just another revenue stream into the gov and SS is just another payout. Usually not explicitly but the discussion would leave you to beleive that. SS is just another line item along with the C-17 and the latest bridge repairs over the Ohio River.
The second is the assumption that the SS T-bills will actually never get redeemed. Not that they are not real money, just that congress will not let SS be a drain on the general fund. That congress will change how SS works (and the ideas here are legion and you’ve heard them all before), before they start having funds go from the general fund to SS. So that SS must be changed so the flow always goes from the SS payroll tax (minus current SS outlays) to the general fund. This reinforces my nagging suspicion that congress really, really doesn’t want to redeem those SS IOUs.
Totally unscientific sample and everyone is still digesting the report (just like you are), but that’s what I’m seeing.
Islam will change
Buff, I think this is a great example of the differnce in spending between the two parties. During the good times when revenue is closer to expenditures, Repubs seem to spend on short term items, military, infrastructure, etc., and Dems seem to spend on entitlement programs.
One set of line items can be cut, the others can not. So during times of economic duress we go further and faster in debt.
Adding more earmarked taxes does not significantly improve the problem. During those same periods of economic duress the spending solution set is reduced. We can see examples in Europe, and in several of our states, where entitlement spending and tax restrictions are forcing many into dire economic straits (bankruptcy?). How much longer before the country follows those sates and EU countries?
Buff one big problem in that analysis is that Social Security is currently redeeming all of the interest and a portion of the principal in the DI Trust Fund as we speak. Under CBO projections the entire DI Trust Fund, something currently dropped under $200 billion, down from a peak of close to $220 billion, is due to be totally exhausted in 2018. And the 2009 SS Report showed something much the same with a 2018 year end balance down to $47 bn, a number that is certain to be much degraded if and when they ever release the 2010 Report.
http://www.ssa.gov/OACT/TR/2009/IV_SRest.html#273849
And absent an actual piece of legislation from Congress abrogating the Special Treasuries in the DI Trust Fund that process of redemption WILL CONTINUE, just as it did from 1972 to 1983 when every Treasury in the TFs plus interest was honored right down to the bottom. Under current law the Secretary of the Treasury, one T Geightner, is required to issue checks on demand by the Managing Trustee of Social Security, another (?) T Geightner, as long as there is a positive balance in the respective Trust Fund. The above Table shows that DI started tapping interest in 2005 and we know it started tapping principal early in 2009 and has continued to. And nobody noticed because legally and practically there was nothing to see, and it was not as if Congress could just get away with chopping checks to disabled workers.
Which is our secret weapon. OAS itself is in actuarial balance well into the late 2020s while Di is bleeding to death right now. A proposal to means test OAS or adjust initial benefits to prices or a raise in retirement age individually or in combination do NOTHING to address the challenges faced by Di RIGHT NOW. And fixing DI’s short to medium term problems arithmetically push the combined OASDI actuarial balance back into the early 2030s.
When the scoring finally comes in the question may be (wlll be if I have anything to say about it) “Why are you balancing the budget on the backs (and wheels) of cripples?” (And yes I know ‘cripple’ is not PC, that is part of the point).
To repeat it really doesn’t matter whether Congress doesn’t like having funds go from the GF to SS, because when it comes to DI it is already happening to the tune of a couple billion a month for DI alone.
http://www.ssa.gov/OACT/ProgData/allOps.html
And it would literally take an Act of Congress to slow down that already ongoing process, the horse has left the barn.
Bruce, thank heavens the Healthcare Bill will reverse that??!!!!??? Oh, and it was all Bush’s fault!
Sorry, for the snark, but we’ve been saying for months the current path was unsistatinable. Now that the administration’s own CBO admits the same, what is to be done?
Bruce,
I was under (the obviously false) impression that SS had not been (or just started to) redeeming the SS T-bills.
I figured it was some kind of basically automatic thing when it did happen.
You still think Obama will sign a bill making anything more than small adjustments to SS?
Islam will change
CoRev
no doubt you are right about the parties. but Socia Security structure has been unchanged for seventy years and works fine. the increase in “taxes” over time just reflects the increase in living expenses and longer retirement. you are still paying for yourself.
as for the difference between temporary budget increases and those bad old dem permanent entitlements. the fact is we are still paying for the Reagan arms buildup. no doubt we could have paid that bill if we didn’t have some welfare programs (not SS) to pay for, but my bet is that instead, we would have had even lower taxes and still have the deficit.
Social Security has not contributed a dime to the current debt/deficits.
CoRev
theCBO is not the administration’s” its the CONGRESSIONAL Budget Office.
whats to be done: a one tenth of one percent rise in the payroll tax this year and next will put DI into “balance” for the next 25 years, and a half tenth after that will keep itin balance thru the end of the century. no reason to expect it go out of balance after that, and if it does, i suspect additional half percents every fifty years or so would cover the cost, and not be much of a burden on future generatioins making more than twice what we are.
meanwhile, a tenth of a percent increase in OASI in about 2026, followed by similar one tenth of one percent increases each year for about ten years, will put Social SEcurity in the black for most of the rest of this century, with a few more tents of a percent from time to time at increasing intervals will keep it in the black forever.
as i try to explain in other comments here, CBO “admits” to being rather stupid about what the numbers mean.
Buff
thanks. you see how hard it is to get people to understand. most of them start out with one or two lies they heard about and “reason” (free associate) from there. then they hang on to what they “believe” as though it was a life raft in a storm. sorry to say this applies to the “policy experts” too.
thinking is much harder than “reacting” to an alarm and running around in circles saying “i told you so, i told you so.”
I would say that Republican tend to spend on tax cuts – definitely not a short term thing.
CoRev the CBO doesn’t work for the Administration and Elmendorf was not an Obama appointee.
And what do you mean by ‘unsustainable’? Under CBOs ‘extended baseline’ I.E current law the deficit vanishes in 2014. Try understanding the graphs.
And if by “unsustainable” CoRev means DI, well I have been blogging to that effect for months, you could search for the post “DI: Sick Man of Social Security” and the various posts about the NW Plan where we distinguish between the plans for DI Trigger, OAS Trigger, and combined OASDI Trigger with the initial fix actually being a response to DI Trigger. Methinks that you jumped over the substance of these posts over the last year and went straight to snark. Because I have been perfectly consistent on this particular point.
Buff
my point exactly. even if we use the long term predictions as a guide to “maybe we should think about this ‘in casee.’ No sane person should change the system now based on those long term predicitons.
As it turns out the “change the tax rate one tenth of a percent in response to a ten year predicition” takes care of all the long term predictions currently on offer, and any that are conceivable.
even some permanent catstrophe… invasion by martians, ecological collapse… can be handled by Social Security adjusting its tax and benefit schedule about a tenth of a percent at a time in response to emerging conditions.
and once we get used to the idea that we are paying for our own needs, we could change either or both ten percent at a time and not suffer any more hardship than the luck of our generatioin would visit on us anyway.
unless we plan to kill the old. of course then we and out children might start looking at each other in a different way.
what Peterson proposes, and Obama appears to buy, is that we kill off the old just a little at a time.
they are saying that old people who have, or could have, paid for their own retirement, should instead be forced to keep working until they have nothing left to contribute to the boss’s bottome line, learn to live on cat food, of take their chance on the Big Casino.
Buff
my point exactly. even if we use the long term predictions as a guide to “maybe we should think about this ‘in casee.’ No sane person should change the system now based on those long term predicitons.
As it turns out the “change the tax rate one tenth of a percent in response to a ten year predicition” takes care of all the long term predictions currently on offer, and any that are conceivable.
even some permanent catstrophe… invasion by martians, ecological collapse… can be handled by Social Security adjusting its tax and benefit schedule about a tenth of a percent at a time in response to emerging conditions.
and once we get used to the idea that we are paying for our own needs, we could change either or both ten percent at a time and not suffer any more hardship than the luck of our generatioin would visit on us anyway.
unless we plan to kill the old. of course then we and out children might start looking at each other in a different way.
what Peterson proposes, and Obama appears to buy, is that we kill off the old just a little at a time.
they are saying that old people who have, or could have, paid for their own retirement, should instead be forced to keep working until they have nothing left to contribute to the boss’s bottome line, learn to live on cat food, of take their chance on the Big Casino.
And for those who like the Big Casino
there is nothing to stop you from playing that game. you have plenty of money left after paying for your Social Security. think of it as a hedge. or carfare home.
where it gets to be immoral is when you start insisting that other people who have a perfectly good way to save their own money for their own retirement be forced to gamble with it instead.
Dale said: “the fact is we are still paying for the Reagan arms buildup.” Actually, no. We have not had zero debt since the civil War.
Arne said: “I would say that Republican tend to spend on tax cuts – definitely not a short term thing.” Actually they are, or can be very shor term. Just look at what is going on with the Bush tax cuts.
Guys/folks I cross posted. My comments were supposed to apply to the CBO Budget projections.
Buff a little snark of my own.
Why do we have to look past 25 years? Because Social Security is actuarially in positive territory for the next 27. If you don’t appeal to 50 or 75 or Infinite Future some people might question your motives.
Bruce,
I just don’t see the point of projecting out that far. Too many variables and too much time for their effects to occur. The error bar starts to become larger than the projection. Think of sitting in 1910 and predicting WW I AND the great depression….
I mean just in the last 40 years we have had shocks that not many predicted very far in advance. The 1973 oil shock, the 20% inflation of the late 70s, the 1989 (?) fall of the Berlin Wall, 9/11, the housing collapse & banking crises of 2008.
its not that it can’t be done, its just a waste of time…
Islam will change
Coberly,
“Social Security has not contributed a dime to the current debt/deficits.”
There is no question that this is the truth, anyone who believes otherwise has been bamboozled, but there is still a major problem, and it bothers me that on one hand we can agree that we are trying to accomplish the same goal, but disagree on letting the public know that we still have a problem to be addressed.
The problem of course, which you refuse to ackowledge, is that in an accounting terms, S.S. is on the up and up, but that is far from reality. We are loaning ourselves money to pay back a loan for which we already paid for, and to accomplish this task we must either raise taxes, cut spending somewhere else, or borrow more. If people like you would ackowledge this in the open, you clearly would have more allies to help you fight and solve the issue…..but you refuse….{Grrrrrrrr}
I would agree that to go past 25 years is an exercise in demographic fantasy. We sort of know how many will be retiring until about 2075, but don’t have any idea on the number of young people in the work force. Going beyond 20-25 years gets one into the area of what will be the desire for people to have children of a generation just reaching their teen aged years. If we recall the population predictions a few years ago have changed greatly and will likley change greatly again in the future. Its sort of an exercise in building a fantasy world and seeing what the fantasy world is like. much like the alternative history folks and what ifs from history. A recent what if, what if aids were transmitted by coughing, what would the world look like now?
> The argument that older people should ipso facto get a smaller share of productivity per capita in the future than they do now this hardly seems unreasonable
I can make that argument!
What if I made the same argument for every class of people:
— children should not have a smaller share of productivity per capita in the future than they have now.
— working adults should not have a smaller share of productivity per capita in the future than they have now.
— investors / owners should not have a smaller share of productivity per capita in the future than they have now.
so do you get what i’m saying?
some class is going to have a smaller share of productivity per capita in the future than they do now, and some class is going to have more. you can’t lock them all in.
why seniors? 6% is not small by any means, and retired seniors are not productive members of society. for my money i would rather make investments.
my take is that if we are going to make guarantees we should make them for a few reasons only.
— if there is a portion of society that is permanently more or less unproductive (seniors or disabled) we should make sure they aren’t destitute. but this means only basic things: food, shelter, basic health care. why wouldn’t these things become cheaper over time as a % of gdp?
— if we are going to redistribute money/services to a class of people, i’d redistribute it to people we are actually INVESTING in, which mostly means KIDS and sometimes parents. so yes to childhood nutrition and yes to education. as a society we will see a return on this investment.
— we have to take care that we aren’t redistributing most of national income to bondholders, so at some point we have to get the federal budget under control. not this year, but after unemployment goes down.
gromit
your “analysis” omits the fact that social security is paid for by the people who will get the benefits.
so your young person, expecting to live longer than his grandparents, saves a larger percent of his paycheck than they did. his children will also expect to live longer than his grandparents, so they will save that same larger percent of their paycheck. then, as if by a miracle, their larger contribution will go directly to pay for their parents longer life while at the same time paying in advance for their own.
you’d have to understand how banking, and saving, works to understand this. or have a clue about anything.
i see six percent of GDP is too much for you to set aside for feeding your “unproductive” parents in their old age. yes, well, we can’t send them out onto the ice floe, so lets just cut their rations.
after all, it’s only return on investment we are interested in. no sense returning that investment to the people who raised us, educated us, built our goddam roads and defended the country. no. their investment doesn’t count because people like grommit are too goddam dumb to understand what investment means, if it means paying someone back. a generation of vipers.
you are picking this 6% number out of thin air. why 6%? why not 80%? that would be really nice for older people.
i specifically said that i think it’s worthwhile to keep older people out of poverty — read my comment — i agree with you there. i don’t know how much that is going to cost in 50 years but i would suppose it will be cheaper than it is today per person in gdp terms because almost everything will be. i don’t know what the number is, but it’s much much less than 6%.
if i had the option of putting money into a government guaranteed vehicle that was indexed to US GDP i would put all of my retirement savings in it. that would be lovely. i’d be getting a ridiculous amount of upside on one hand and really no downside. i wonder why this sort of thing doesn’t exist in the real world?
another way of putting this is that in investing/saving there is always a tradeoff between risk and return. government guaranteed investments are lower risk, so they return less than average. i don’t see why that should be any different for social security, or government bonds, or whatever.
“… it can be adjusted each year in ways that are almost imperceptible to the worker faced with paying the taxes.”
In the “how to boil a frog” sense, or the “insignificant to their actual welfare” sense?
kharris
neither. the frog is not going to get boiled, and a tenth of a percent increase in the tax from time to time is what it takes to preserve their actual welfare.
harris.. while the tax is going up an average of a fourth of a tenth of a percent per year, incomes ae going up more than one percent per year in real terms. so the frog is never going to get boiled.
over 75 years, the tax will go up about 2% total, while incomes will have gone up to about 240%.
you end up paying a larger percent of your wages, and still having more money after paying the tax than you had at the beginning. you have to have some ability with numbers to understand this.
gromit
the 6% comes from the CBO report. it’s not 80% because it’s 6%. it’s one thing to be stupid, but you are working at it.
well, social security IS indexed to wages, and wages are more or less “indexed” to GDP… or is that stretching a chain of causation too far for you to follow.
the trouble is your brain blows up with nightmare associations because you can’t do arithmetic.
Social Security is pegged to a certain targeted ‘”replacement rate,” which together with natural limits on life expectancy guarantee that that the cost of old age benefits will never be more than 20% of your income… and that’s 10% of what the boss gives you, and an equal amount taken out of what he keeps for himself. Since wages below 100k (today’s terms) are about 35% of GDP, that 20% is not going to be more than 7% of GDP… no matter how big or how small GDP gets. No danger of it rising to 80% of GDP like the Petersons and Walkers would like you to believe.
And if 20% seems too big for you, ask yourself how do you expect to pay for groceries and rent after you can’t work any more? I know. get a job at WalMart, the highest and best use of human beings. Can’t have any unproductive people hanging around. After all, Mom, what have you done for me lately?
Gromit
well, good. you agree with me then. Social Security returns an “average” of about 2% REAL return. Somewhat less than the riskier investments the Petersons and Biggs are always touting. PLUS it pays insurance… something the riskier investments don’t.
And the average return is not the right way to understand it. Because of the insurance factor, the return ranges from more than 10% for low income workers to something less than 2% (but not negative) REAL return for the people who end up high earners after a lifetime.
This 2% is “enough” for ordinary people. But if you are rich, and are used to 3 or 3 and a half percent, which you think of as 7 to 10 percent because you can’t keep straight with inflation and fees, not to say taxes, you get real mad had having “wasted” all that money on a forced insurance plan. Why, if i’d invested that money (and my luck held) I’d have 3 million instead of a measeyly 2000 dollar a month check (which is the same as a million… but who can keep track of that), and god knows i need that 3 million dollars, every one of them more than I would have needed a thousand dollars a month if my luck went bad….
to those who don’t recognize irony: i am putting words in the mouth of the “rich” hater of social security. if you check my arithmetic here i may be off a bit. just talking off the top of my head. but the funny thing is i won’t be any further off than the guy who calculates his return to the fifth decimal place and forgets all the “if only’s” in his calculation.
The CBO study on alternatives is out though maybe not yet at the CBO website (it should be there soon,at latest tomorrow). It scores 30 alternatives of which option 2 (0.1% increase in FICA for each of the 20 years starting in 2012) is closest to the NW plan. Per CBO this option closes the 75 year gap.
Link and discussion tomorrow morning.
i suppose i need to make clear
i am VERY sure about the twenty cents per week per year. that has been carefully calculated and checked.
the “top of my head” calculation above applies only to that paragraph.
> The argument that older people should ipso facto get a smaller share of productivity per capita in the future than they do now this hardly seems unreasonable
WG had a point here before he blow it up later.
I think that what is meant is that SS beneficiaries should be a portion of the INCREASE in productivity. Right now the report shows that SS receipts will decrease as a share of GDP even though the number of retirees will increase as a share of population. If you indexed benefits by CPI (if there were a measure that people did not argue about), then by definition (mine) you would not be increasing benefits. As it turns out you would not need to increase taxes to do this. But as has been described, benefits are indexed by average wages. Keeping this requires increasing taxes.
But an increase in taxes of about half of the current portion of the GDP will allow benefits to continue to be indexed by wages for an increase of about double of the portion of the population. It sounds convoluted, but it means beneficiaries (the people who built the infrastructure) only need a portion of the gains smaller than their portion of the population in order to keep the current schedule.
bruce
i only looked at the summary. the one tenth percent starting now and running each year for 20 years would indeed close the 75 year gap. but you could run it just a little longer and close the “infinite horizon” gap.
i don’t like starting it now and running full speed for twenty years because that just increases the Trust Fund and that’s like giving congress another case of whiskey to play with. On the other hand, maybe if we give them that case, they’ll go to sleep and leave us alone for a few years.
But when they wake up, say in 2020, they are going to start screaming about how the Trust Fund “is GOING BROKE! WILL RUN OUT OF MONEY IN ONLY SIXTY FIVE YEARS!”
Arne
yep. sounds convoluted. why not let the people pay that twenty cents per week more tax every year and live like human beings when they retire instead of some relatives evolution left behind?
if you are going to index retirement to inflation rather than wages, why pick 2010 as your base year?
why not pick 1936? after all refrigerators, cars, and flush toilets are just “increases in standard of living” only incidentally made possible by the work, creations, and good citizenship of the people, now retired, who went before you, and eduated your ass after a fashion.
In case anyone wonders why i get so short with some people.
Here we have a person (no names please) who is smart, decent, well educated. Earned at the top of the SS taxable scale for most of his life. And generally a “friend” of Social Security.
But he sees a future where people are going to live longer, and he wants to ‘compromise.’ You see he really can’t stand the thought that “his money” would go to provide a decent standard of living to old people who have the misfortune of “going to live longer.” He could use that money himself and invest it wisely to “live the way he wants to live” when he retires.
No thought that the SS pension is pretty bare bones to begin with. No thought that those future old people may have aching joints and bad jobs. No thought that they might like to retire early and see the sunshine for a few years before they get hauled off to the knackers… er, rest home. No thought that he might save for that “better retirement” out of the 100k or more a year he is making.
Nope, he’d rather keep that money himself and gamble on a better future for himself and to hell with those people who don’t have the skills or luck or health to do as well as he does.
But hey, he’s not peterson, he’s willing to split the difference. an extra ten cents a week for him, an extra couple of years added on to your sentence for you, or maybe only cat food for three meals a week instead of five. yes, the reasonableness of the man is truly astonishing.
I hope you know that I was not suggesting indexing initial retirement wages to benefits. Rather I was noting that SS already brings some of the benefits of increases in productivity to retirees. It sounds convoluted because it is convoluted. It is complicated enough that most people don’t understand the numbers. How often have you seen people refer to SS as regressive? That is just clueless.
“natural limits on life expectancy guarantee that that the cost of old age benefits will never be more than 20% of your income”
I think this is why we disagree. I think you are wrong about this assumption.
I expect that by the time people are living 3 or 4 years longer that most of them will also be healthier at 65 than then current cohort. If they aren’t actually living longer then SS does not need any adjustment.
A 3 year increase in Full Retirement Age would be tragically stupid in the face of 3 years longer life. Better to discuss why people who think 70 is a good retirement age are overdoing it and better to discuss tying any increase in FRA to actual increases in healthy lifespan than to set yourself in such a rigid corner.
Arne
I am not set in a rigid corner. Raising the tax a tenth of a percent AS NEEDED gives you a long, long time to see how people are actually doing with this living longer, working longer and loving it.
The danger is that what you “expect” is going to be set in law this year. Then you will be in a rigid corner, and you won’t know it until it’s too late.
The fact is that healthier or not, most people would choose to retire sooner if they knew they could afford to pay for it. The can. It’s only the rich people who can’t. Because, you see, an extra tenth of a percent off their incomes from time to time would be diverted from “good investments” to “the safest possible investment.” And then they would never be able to live they way they “want to live.”
Not if it would require their actually taking a tenth of a percent of the rest of their money… more than twice what the oridinay worker has to live on… and “investing” that in the good investments.
Where we disagree… and you will be mad at me for this… is in the rationalizations you need to support what is in fact greed. you “expect” people will be healthier, therefore, there is no reason for you to accept a tiny diversion of your ample income if that would allow those people the huge luxury of being able to retire young enough to enjoy it, if that’s what they would choose if they could pay for it themselves.
You are being so rigid that what I am saying is not penetrating.
A reasonable increase in FRA is to 68 years 30 to 40 years from now if Intermediate Cost projections are right. Now is the time to discuss and even the time to legislate it as long as it remains flexible.
That fills only about 10 percent of the gap. That leaves 90 percent to be filled by .1 percent increases when they are needed. Both the tax and the FRA increases need to be triggered by actual data. Since people won’t be living 3 years longer and the TF will not be decreasing by 2021, nothing should change for at least 10 years. The only difference is that having a plan will make the 75 year gap disappear regardless of our inability to predict what will really happen.
No, the other 10 percent will not make much difference to me, but neither will it make much difference to even the poorest SS beneficiaries, and it may make a difference to moving legislation forward.
Given that most people are currently choosing to retire at 62 rather than continue to FRA the operational effect of increasing the latter is just to penalize those manual workers more or less forced to early retirement. Because I suspect most knowledge workers will just continue on working until FRA, perhaps not least because their health insurance depends on their work status.
If I had my way instead of an increase in FRA we would have a gradual dial-back in it to 65. To the extent that people have the energy, health and desire to continue contributing to society after that they can apply that to activities that are not necessarily tied to immediate compensation: volunteering, writing, art whatever. Lashing ourself to a model that insists that everything has to result in material product is I think a mistake. And the reason why so many people here have a problem understanding the French, “why would any group only work 35 weeks a year, retire at 62, and take hour long lunches when instead you can work 60 hrs per week and accumulate stuff you never actually have time to use?”
As if there was no value to setting your own schedule and having time to think. Or to share your life experience with others.