Consensus is wrong on Social Security fix
Raising the retirement age isn't as wise as it sounds.
By Theodore R. Marmor
and Jerry L. Mashaw
An old adage says that every problem has an obvious solution that is both simple and wrong. We fear this applies to the idea of increasing the formal retirement age for Social Security.
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Social Security pensions are crucial to most low- and middle-income Americans' retirement income. Two-thirds of retirees get half or more of their retirement income from the program, and one-third are almost totally dependent on it. The average yearly benefit is only $14,000, so any reduction causes real pain in the lives of retirees whose working incomes were in the low to medium range.
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In short, adequate retirement income for average Americans is already in jeopardy. And this is in an era marked by declining employer pensions and radically reduced real estate values.
Moreover, low and medium earners are least likely to have benefited from the health advances that make raising the full retirement age seem like such an obvious solution. Over the past 25 years, life expectancy for upper-income men has increased by a whopping five years. Men in the lower half of the income distribution, however, have seen their life expectancy increase by only one year. And for lower-income women, it has actually declined. Not all Americans are leading longer, healthier lives, and those who aren't depend on Social Security the most.
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In short, this obvious, simple solution to Social Security's relatively modest long-term financing problems turns out to be, if not wrong, not nearly as right as it appears. There is much pain and only modest gain from further raising Social Security's retirement age. Ordinary Americans, who overwhelmingly oppose the idea, seem to understand that better than our opinion leaders.
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http://www.philly.com/philly/opinion/inquirer/20110531_Consensus_is_wrong_on_Social_Security_fix.html