Tuesday, December 07, 2010

Barn Doors

There's a bit of "too little, too late" in this:
While David Certner, legislative policy director for AARP, says his members fully support efforts to rein in federal spending, he adds that upping the age for Social Security eligibility isn't the right way to go about it. Raising the wage cap, currently $106,800, would be better, he says.

In truth, a very different scenario is playing out, and I'm pretty surprised that Certner is missing it: de facto, people are raising their own retirement ages significantly.
See, most Boomers and people like me immediately following them believed in the lie of a "job for life and a gold watch at 65". You know, pension, retirement, benefits. We planned our early work careers along those lines, and when the deep recessions of the 80s and 90s (and 00s) hit, we made some small adjustments. Sure, we lost our pensions along the way and were asked to contribute to 401(k)s, but only the really careful among us, like me, did so.
After all, we needed to buy cars, and pay for education and houses. And vacations from the jobs that were becoming harder and harder to do on our owns as we saw our co-workers laid off. And we swapped jobs because the new firm offered better salary and benefits, but then got laid off when the economy tanked a little.
But we managed to latch onto a new job in relatively short order and could put our houses in some form of financial order again.
In other words, that image we had of Dad going off to work until he retired with IBM or whomever had completely changed and we never noticed it. And we also never noticed that Social Security had gone, at the insistence of businesses and with the complicity of government, from a supplement to our retirement income designed to keep poor elderly folks from starving to death to many people's main source of retirement income.
Of course, there will be an element in this country that says "It's your own fault," blitheringly ignorant of the fact that they're in the same boat as well, but expecting a bailout. Too, you may recall the other myth that our homes would fund our retirement: the best investment, housing prices always go up, and so on. Those same scolders probably think this is still true, as well.
In reality, what's going to start happening now, particularly as more and more Boomers reach 65, is they'll simply ignore the calendar and keep working. They'll file for Social Security, make no mistake about it, but those benefits are tied to one's salary, reducing at a sliding scale as one grows older. For many, there would be no benefit to filing for Social Security.
In effect, then, they won't actually retire until closer to 70 or 75. Or...raising the actual retirement age significantly from 65 (62, for many).
The deficit reduction commission that President Obama has suggested that long term rises in the retirement age will save significant amounts of money, and it would. The GAO claims that these would be offset completely by hikes in disability claims, and there's some possibility ot that happening as well, altho I'd need to see their data, especially in light of the current meme of healthier living as opposed to what our parents and grandparents did (smoke, drink to excess, chemical additives, pollution, and so on).
The one thing no one can deny is, to talk about raising the retirement age right now is ludicrous, because it's happening already.