Social Security, Life Expectancy, and Income Inequality

March 11th, 2013 at 11:27 am

Really impressive piece of journalism this AM from Mike Fletcher at the WaPo about the differences in life expectancy between older persons of widely different economic means.  The figure below tells the story, showing the evolution of differences in life expectancy between two Florida counties, one with income levels twice the other.  The differences are particularly stark for men.

The piece importantly draws out the implications of these findings for a policy change for which many in DC are pushing: increasing the retirement age for Social Security.  The eligibility age for full benefits is already on its way up to 67 from 65, but based on the top (blue) lines in the figures below, many are calling for it to go higher still.

But what about the lower lines?  Increasing the eligibility age is a benefit cut for all recipients, but it obviously falls hardest on those who’ve paid in throughout their working life but don’t stick around long enough to collect their benefits (it’s also true that lower income beneficiaries who do live long enough collect more than they put in, and visa versa for those at the top of the income scale—the benefit schedules are progressive).

Two points about this.  First, in decades of work on these issues, I’ve only heard the “raise the eligibility age” argument from those whose life expectancies are going up; those in the lower lines in the figure have little voice in this debate.  Second, this is another way in which our historically high levels of income inequality must be considered in our policy debates.  Any “reforms” of entitlements must then factor in this critical information and protect the economically vulnerable by insuring their lasting retirement security.


Source: WaPo, link above

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7 comments in reply to "Social Security, Life Expectancy, and Income Inequality"

  1. D. C. Sessions says:

    Are those life expectancies from birth? Age 50? Age 65?

  2. Fred Donaldson says:

    Who thinks it is a good idea to pay retirement benefits only when someone is nearly ready to die, and who would raise the Medicare eligibility age and saddle hundreds of millions with more years of private health insurance?

    The answer, as always: the people who are rich enough to not be affected in a meaningful way.

  3. SP DeSilva says:

    Those at the upper income levels also tend to have jobs they can continue to perform to age 70+ if they so choose (think popes, Supreme Court justices, and Dan Rather. Pilots and surgeons, maybe not so much)

    • Perspective says:

      Yes, because laying bricks is “real” “hard” work, while toiling at a desk for 60+ hours weekly, and working on a laptop another 10 hours on the weekend is “easy stuff.”

  4. Noni Mausa says:

    So it appears that we should lower the eligibility age in proportion to life expectancy. Or in accordance with lifetime income, since people whose lifetime income is below a certain amount are more likely to die young and less likely to have been able to save or invest.

    By this standard, the bottom 20% should be eligible at 55. It’s only fair.

    • Perspective says:

      So, punish higher-earners with vastly disproportional higher taxes for their entire working lives, punish them even more when they marry another higher-earner, and then force these evil people to wait 20 additional years to collect Social Security?

      Yeah, that sounds totally fair…

      • Jonathan says:

        “So, punish higher-earners with vastly disproportional higher taxes for their entire working lives”

        Maybe they are on your planet. What’s the weather like there?