Rebecca Vallas, Jackie Odum and Rachel West of the Center for American Progress argue that increasing the Social Security retirement age – currently 66 – is a bad way to move the program toward solvency:
Social Security’s benefit structure is progressive—that is, benefits replace a greater share of wages for lower-income workers, in part because they contribute a larger portion of their earnings in payroll taxes during their working years. Yet when viewed across beneficiaries’ lifetimes, the program’s progressivity has been deteriorating due to the widening gap in life expectancy between rich and poor Americans.
As I’ve argued elsewhere, linking Social Security’s retirement age to differential mortality between rich and poor misunderstands how Social Security works, because an increase in the retirement age is nothing other than a uniform percentage cut in everyone’s benefits. I can think of many reason why you wouldn’t want to fix Social Security with an across-the-board benefit cut, but the link to differing longevity for rich and poor – while seemingly intuitive – isn’t one of them.
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1 comment:
They are correct when they say "It would amount to across-the-board benefit cuts for future generations of retirees," but fail to see that that is inconsistent with claiming that "lower-income workers would bear the brunt of these cuts."
If we want to make up for the reality that lower wage people may have lower lifespans because of the work they do, we should consciously make SS benefits more progressive.
I favor including the consideration of raising the Normal Retirement Age because it may make some sense to cover part of the shortfall with an across the board cut. As with my comment to the previous post, the solution needs to recognize that SS already includes some compromises.
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