How Raising the Retirement Age Hurts Workers

Raising the Social Security retirement age is a lousy idea.

Why? At a recent CWA meeting, Deepak Bhargava, executive director of the Center for Community Change, put it this way:

It’s not that working people are living longer, so an increased retirement age makes sense. Working people and people of color aren’t living longer. The elites want us to increase the retirement age because hedge fund managers are living longer.

Sure, this proposal to “fix” Social Security seems to have gained momentum. But look closer and you’ll see it’s mostly among columnists, CEOs, politicians and policymakers -- people who get paid way more than the average American, love their jobs and probably aren’t counting down the days until they get to stop working. These certainly aren’t blue-collar workers in physically demanding jobs.

The Washington Post’s Ezra Klein writes:

That’s what’s galling about this easy argument. The people who make it, the pundits and the senators and the CEOs, they’ll never feel it. They don’t want to retire at age 65, and they don’t have short life expectancies, and they’re not mainly relying on Social Security for their retirement income. They’re bravely advocating a cut they’ll never feel.

Just take a look at this graph.

Since 1977, the life expectancy of male workers retiring at age 65 has risen six years in the top half of earners. But the bottom half of the income distribution saw their life expectancy grow just barely a year.

So raising the retirement age is neither the simple nor fair solution.

In the words of Nobel laureate economist and Social Security expert Peter Diamond:

What do we know about the people who retire at 62? On average, shorter life expectancy and lower earnings than people retiring at later ages. If anyone stood up and said, “Instead of doing uniform across the board cuts, let’s make them a little worse for people who have shorter life expectancies and lower earnings,” they’d be laughed at. Anything that reduces benefits is going to hurt everybody. It’s going to hit people with short life expectancies, it’s going to hit people with high life expectancies. But we should not make it worse for those retiring earliest.