Catch-22 of Aging Gracefully
Older Americans may find solace in David Brooks’ report today on longitudinal studies “producing a rosier portrait of life after retirement. These studies don’t portray old age as surrender or even serenity. They portray it as a period of development…”
So much for Charles DeGaulle’s famous aphorism, “Old age is a shipwreck,” and Freud’s assertion, “Old people are no longer educable.”
It’s comforting to learn that we are getting “more outgoing, self-confident and warm with age,” but Brooks is only leading us up to a grim Catch-22–we are stealing our happiness at the financial expense of our grandchildren: “the federal government now spends $7 on the elderly for each $1 it spends on children.”
Overlooking the fact that most of that comes from a lifetime of Social Security paycheck deductions, the middle-aged Brooks asserts: “Only the old can lead a generativity revolution–millions of people demanding changes in health care spending and the retirement age to make life better for their grandchildren.”
As an example of the stirrings of such a movement, Brooks cites Tea Party enthusiasts as a symptom of “the only way the U.S. is going to avoid an economic crisis…if the oldsters take it upon themselves to arise and force change.”
35 Responses to “Catch-22 of Aging Gracefully”
good thoughts here Robert, esp that last, 'savings of so many elders down'… so true.
Just a note on Sigmund; he was unhappily married, leaned hard on his daughter Ana to take care of him as almost a second wife, had literally a hole in his jaw where cancer had settled from his years of pipe smoking, and in old age also had to flee Vienna in the midst of wartime. He also had taken on a young psychiatrist whom he thought would be his crown prince of his 'therapy' he invented. But the 'crown prince,' Carl Jung, left Freud and Sigmund was bitter-bitter about it until his dying day. It may have been all the above plus that doomed quasi-father /son relationship that caused him to say 'Old people are no longer educable.' I imagine old age for him was very very difficult.
Let's be very clear: today's SS taxes go to pay for today's retirees. Boomers, your money did not go into some account for your use in the future. The money paid into the system way back when, went to pay for yesterday's retirees, who are very likely still alive, in their 80's and 90's (because people don't die these days–they linger and linger and suck money out of the Medicare system–but that's an argument for another day).
Today's retirees are being supported by today's workers. Demographically, this is a problem. When the Boomers (born between 1944-1964), of which David Brooks is a member, left home and entered the workforce, jobs were plentiful and reasonably well paying. The Boomers proceeded to legislate for themselves increasingly generous benefits, which they pushed off to the next generation–Gen-X.
Unfortunately, Gen-X (born 1965-1980) is roughly half the size of the Boomer generation. There aren't enough of us to pay for all the Boomer benefits, especially since they are beginning to retire in increasing numbers. That leaves the next generation, the Millennials (born 1981-2000) to shoulder the benefits of both their grandparents and parents.
Anyone with kids in this age range knows how difficult it is for them to find jobs, and they tend to be relatively much lower paying than the jobs that were available when the Boomers were the same age. These kids are burdened with astronomical student loan debt, many with professional degrees but unable to get arrested in today's job market. That's NOT GOOD, if you were wondering.
We have a real problem when the way we are paying for retirement beacuse it is generational theft, in essence. And make no mistake, that's what it is.
And the problems of the SS system are miniscule compared to the Medicare issue.
Well social security would have been fully funded had Reagan not robbed the Social Security fund to pay something called “Star Wars” which no longer exists, (speaking of waste).
I find it interesting that Germany, whom completely absorbed a third world nation, (East Germany, the DDR), and their people can afford to fully retire at age 58.
There are things that we can truly learn from other peoples, if only we were not so self absorbed to open our mind and eyes.
Maybe if we spent $50 less per person in the military we could then afford to promote our youth's education and development, not spend less on our elderly. What do you want to do, through these people out into the streets?
There are lots of things we could do to chane the situation if we had the political will, and open hearts.
First of all, all earnings should be taxed for SS benefits, none of this silly cutoff nonsense.
Secondly, we need to means test SS. Elderly with assets in the millions of dollars do not need the pittance of SS every month.
Third, raise retirement age with no early retirement. I know too many people capable of working, in their early 60's, who took early retirement because it sure was easier than working! Meanwhile, they go to Florida every winter and I'm stuck paying another $5200 *extra* in income taxes.
Just a few suggestions that will never happen, since they would take actual sacrifice from people.
This post has me convinced. I'm about to turn 59, so when I hit 65, I'll just go wander into the woods to die as old native Americans are alleged to have done for the benefit of the tribe.
The above arguments are right, the fact I've worked 40 plus years and consistently pay a SS tax, then Medicare payments make no difference. It has been my privilege to donate this money with the promise that I would receive recompense in my dotage.
VeratheGun's points above are reasonable, and points one and three are linked. I believe you'll find most who take early retirement also are those who benefit from the cut of of SS taxes while they worked.
Another aspect to consider is Military Retirement. Why do those who put in twenty years of service start receiving a lifetime monthly payment at 39 or 40? If they would only receive this benefit when they reach 65, hundreds of billions could be saved. If this appears unfair to soldiers, perhaps one can also see that same unfairness holds with older Americans.
Now, now HemmD, let's not be hasty. There's no need for you to commit hari-kari just yet.
These problems are within our ability to fix. In my dream scenario (yes, it's a dream, but everyone can have dreams) we would fix the SS insolvency problem by seeing it for what it is, clear eyed, and then tightening it up by some of the means I mentioned above.
There's no need to toss the elderly into the street, but there is the need to be realistic in what we can provide for them, and for how long, and among the younger people, let them be assured that the system will continue to be there for them when they have need of it.
One of the best ideas I have heard, in a long time, was from, I believe, John Snow, Bush's somthing or other. He said, if we really want to get real about this problem, we could give every American citizen, at birth and every year after that until they reach the age of 18, $2,000 in a retirement account.
No one would have access to this account until retirement age, but by the time that young person was not so young any more, that $36,000 would have grown into a substantial amount, to provide for them in retirement. I do not support individual retirement accounts in the sense that each person manages their own, since most of us have no clue how to do it.
Of course, that leaves out those not born here in the US, and naturalized citizens, but just think how revolutionary that system could be!
VeratheGun
Your idea is not revolutionary, it's how the thing worked for years. SS ran surpluses every year and only when the wise in Washington saw a way to write down their yearly costs by combining SS funds with the general revenue fund, did the “crisis” come into being.
I liked your earlier ideas. No one has ever explained rationally why there is a cap to SS payments based upon income. The same holds true for early retirement. What part of “early” don't we get? If you retire early, maybe you need to have the funds to do so.
I also believe the military retirement deal also belies the way things should work. Military retirement pay should begin when you retire, not when you separate from the Army.
As to my proposed walk into the woods, maybe I'll just run for the House or Senate; the retirement percs they get are wonderful I hear.
Means testing for SS seems obvious enough, but the mere fact of it's logic and fairness hasn't been enough to make it politically viable. Maybe now that all or our economic focus is being “concentrated” a bit that will change.
And btw, old age is still a shipwreck for lots of Americans, although they aren't likely to be the sort of people David Brooks has much to do with.
I heard a story on the radio yesterday about my state legislature–lawmakers voted to deny lifetime retirement benefits, including health care, to future state lawmakers, but not themselves.
It's okay to deny benefits to other people but not to onesself, apparently! What a bunch of gutless wonders. No wonder people are cynical about politics.
We should be working to lower retirement age, not raise it. We have raised it enough. I don’t even want to discuss raising it…..ever.
I mean, it you are going to “open your heart”….
The problems with the structure of these programs, and the problems with federal finance (that begin with deficits — redeeming trust fund bonds requires new money be found from somewhere) have been long known. On at least one recent thread I provided several links related to this, and to societal aging.
The retirement age is too low, and should have been in the low 70s by now. The other future reforms of the program will involve benefit reductions either for everyone while retaining universality, or by applying the means test to exclude benefits from many, to control costs. This will be accompanied by higher taxes to pay in full the benefits that remain, for whoever will continue to receive them.
DLS
Your analysis appears sound, but you of all people should know that SS problems will just be kicked down the road as neither party is willing to truly address this problem. They'll keep kicking that can until they run out of road….
Too bad, I was really looking forward to early retirement and trips to Florida every year.
Respectfully, this is unrealistic.
People live much longer than they used to. The chance of living to be 85 years old is something like 75%, if you are healthy at 65.
Social Security is the dole. An unpleasant fact, perhaps, to older Americans, but nevertheless true.
We can't afford to have that many people on the dole for the last 30 years or more of their lives.
People who are able, need to work longer. Studies have shown it is better for us, anyway.
What is most frustrating to me is that figuratively, we are tossing the Visa bill from our largesse into the crib of our children and grandchildren, before waltzing off to Florida.
It's absolutely vile for adults to make all the rules, and expect the next generation to pay for all of it. Children don't vote, they have no political voice, while the elderly are the most powerful interest group in the country.
Is it any wonder why we serve the interests of one group over the other?
Vera
“Social Security is the dole. An unpleasant fact, perhaps, to older Americans, but nevertheless true.”
If I've paid for forty ytears, explain to me what YOU tyhink “the dole” means. I think you'll find “that word does not mean what you think it does.”
” They'll keep kicking that can until they run out of road….”
I've even identified when that is: 2016 elections.
(Onset of Social Security deficits — redeeming trust fund bonds — is projected to happen around 2016, an election year. At that point, more money must be found to pay the benefits in full, and by definition the problem can no longer be evaded. Yes, evaded, not avoided — they should be solving the problem now, and they are dishonest to deny there is no problem or an easy solution is at hand later. The long-term incumbents will retire either in 2016 or more likely, in 2020, in large numbers. Their replacements will be handed the task of solving a worse problem, during the start of a very long bear market as Boomers are selling the private assets they have to finance their retirements, at the same time.)
DLS
It's good to know that our two party system has taken the time to plan our economic demise. It really does take a bi-partisan effort to get things done in Congress.
Vera
“It's absolutely vile for adults to make all the rules, and expect the next generation to pay for all of it. Children don't vote, they have no political voice, while the elderly are the most powerful interest group in the country.”
You sound like the late sixties or early seventies. Don't trust any one over 30, that's the ticket.
Any time the youngsters want to pay us old goats back for the food, clothing, education, and nice house they grew up in, I'm willing to collect.
Old age may be a train wreck, but youth is wasted on the young.
Those 40 years you pain into the system, that money went to pay for the retirees that were retired at that time. You have no real money built up at this time, you have only promises. Neither do I.
That was very nice of you to pay for those retirees. Very kind of you. But upon retirement, it is my generation and the generation after, that will be footing the bill for *your* retirement. Generous of us, no?
You will be, essentially, living off the largesse of the portion of society that is still working. That's the dole, as far as I'm concerned. It is the social contract that we have agreed upon, but it is becoming untenable. This must be addressed.
I say this not to offend, though I am sure I must have, but to point out the reality of the situation. We are in a pickle. We cannot afford the system as it now stands.
What are the things we can do to change it?
Ah, but here is the difference: they had no say in being brought into this world. It is our job to provide for them, even at great cost to ourselves. And I say this as mother to four children. I know the kind of sacrifices that we must make for them.
But children grow up. It is only rarely that a child does not become self sufficient and leave the parents. There is the joy of seeing them learn, grow and develop into a fully functioning adult. Most children do leave the nest.
Life is hard enough without inheriting the mistakes of the generation that came before. Young people today are going into debt tremendously to obtain educations, they are confronting an abysmal job market. They face a series of challenges that you and I did not, at that age.
They owe us nothing beyond respect and human decency. They should not be responsible for paying for wars, and deficits and drugs consumed, before they were even born. And it is terrible to think that some people think they should be.
Vera
First, it was not generosity, it was responsibility. Social responsibility. It's the best example of “paying it forward” that I know. It's the same kind of social responsibility that makes one pay for schools one doesn't attend or for roads one does not travel.
That being said, the pickle is indeed large and unpleasant.
My solution requires that the young remember that reponsibility while requiring the old to remember true fairness. Joe Biden doesn't need SS, nor do Wall Street Bankers. There are millions, however, who have “paid it forward” for too many years to be told that is just too tough now that one has reached retirement.
Oh, no, I don't advocate taking away the benefits of anyone near retirement. Again, it is our social contract and it must be honored. But like any contract, it needs some revision when it becomes apparent that circumstances have changed.
The young need to be cognizant of our difficulties, juat as we need to be cognizant of theirs. It is not all sweetness and light to be young right now. I know too many young people who are struggling to feel anything more than grateful that I'm not one of them!
Wall Street bankers can go to hell, as far as I'm concerned. And Joe Biden has a very generous government pension plan, he won't collect SS, anyway. We should all be so lucky.
“Wall Street bankers can go to hell, as far as I'm concerned. And Joe Biden has a very generous government pension plan, he won't collect SS, anyway. We should all be so lucky.”
Means testing is one reasonable change that would be of benefit. Likewise, payment into SS should be open ended. If a Banker wants to collect a hundred million dollar bonus, maybe it's about time he paid his 7.5% on the whole 100 million and not just the first 50 thousand. There may not be many millionaires, but plenty of people make over the current cut off. 7.5% additional for all income over 50k would go a long way to help while not hurting those who already give up a bigger portion of their gross salary to SS.
Truthfully, if somebody said that the new retirement age was 68 instead of 65, I'd have little problem with it. Just make the changes ten years in the future, not a year before I'm due.
Interesting thread. As I noted in another, it makes zero sense to advocate delaying retirement, hence keeping millions of elderly on the payroll, while simultaneously whining about abysmal job prospects for younger Americans. You want elderly people to maintain a lock on every single high paying job in America? I don't get it. You do know that we pay for the unemployed and impoverished too, right?
Currently, the trust fund is estimated to run out of money by 2042. Let's face it. None of has a clue what the global financial picture will be even 10 years from now, let alone 32. The $3.5 trillion it would take currently, to keep SS healthy for 75 years is less than the money Bush gave away to his rich buddies in tax cuts and a needless war of choice.
For over 30 years, the GOP (yes and some Dems) has pursued a “borrow and spend” philosophy that has saddled future generations with a staggering national debt. The total of all presidents before Reagan added up to $1 trillion. Reagan tripled it. Bush I doubled that. Clinton brought it down slightly, Bush II binged out on “tax cut” fiscal policy and unfunded wars and corporate giveaways like Medicare part D.
Now we're acting like caring for our elders is beyond our means, but tax breaks for fat cats and playing policeman to the world, and massive corporate largess; oh those are all just fine. Get a grip. Us “geezers” are an unstoppable voting block, and every day, every worker gets older and wants a safety net in place for themselves. Better look elsewhere for money to pay for this endless coddling of the super rich and pointless militarism.
True enough, and yet all of us inherit the mistakes of previous generations. Of course we inherit some of their accomplishments as well. I'm the same age as HemmD, but I bash the boomers as much as anyone. My feeling is that they wasted much of their enormous potential by ignoring so many of the lessons they learned early in life and by opting for lives of self-gratification instead. Of course there are many examples of boomers who took a nobler route, just not enough of them. Only my personal opinion in any case.
Anyway, I agree with GreenDreams, this is an interesting thread and I find myself in agreement with certain aspects of nearly every post, even though we are all approaching the subject from a different perspective. And oh by way, don't mess with my SS.
“it makes zero sense to advocate delaying retirement”
It makes infinite sense, because the retirement programs are unsustainable, and we can't afford public expense for people to retire too early. (There is also no need for a 1930s view toward the young and a “fixed amount of labor” misconception.)
Oh — and G.D., you omitted, again, Obama and the Congre-Dems' record spending, beyond what Bush did. Obama's budget, also, projects deficits forever. Is that responsible? (No.)
“Currently, the trust fund is estimated to run out of money by 2042″
Now, you should know that it's wrong to look at this, as Pelosi has done (wrongly, of course), rather than at what counts, when Social Security (and Medicare) deficits begin. The trust funds have no value — they are just claims on revenues needed to be secured in order to pay benefits in full. If that is what's desired, then once deficits begin, new money must be found somewhere — more taxes, more borrowing, or taking money from elsewhere in the budget. That is when the serious problems begin — long before “trust fund exhaustion” (in 2037). Why do people avoid or try to evade the obvious?
* * *
“What are the things we can do to change it?”
(No, changing federal law to make funding of retirement programs “mandatory” is no magic solution.)
Aside from modernizing the retirement age, and probably indexing it?
The base case for entitlement reform is what the Trustees identify as sufficient to make it solvent.
(To this day, few people read the Trustees' Reports, as some of us have for the past several years.)
“[E]xpected [Medicare SMI Part B, and Part D] steep cost increases will result in rapidly growing general revenue financing needs-projected to rise from 1.3 percent of GDP in 2008 to about 4.7 percent in 2083-as well as substantial increases over time in beneficiary premium charges. “
“[Medicare] HI Trust Fund could be brought into actuarial balance over the next 75 years by changes equivalent to an immediate 134 percent increase in the payroll tax (from a rate of 2.9 percent to 6.78 percent), or an immediate 53 percent reduction in program outlays, or some combination of the two. Larger changes would be required to make the program solvent beyond the 75-year horizon.”
“Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16 percent increase in the payroll tax (from a rate of 12.4 percent to 14.4 percent) or an immediate reduction in benefits of 13 percent or some combination of the two. Ensuring that the system remains solvent on a sustainable basis beyond the next 75 years would require larger changes …”
http://www.socialsecurity.gov/OACT/TRSUM/index….
There's a growing trend to live with your parents, well into the 40s (so far). That way, if your parents lose their home, you lose yours at the same time.
SS certainly isn't the largest problem facing us, and it's fixable too. It's just easier to kick it along.
I'd personally love it if they could decide the rules now, so that I'd know how to plan for it. But, if history is any guide, I'm in for about 5 more “this will fix it forever” cycles.
“Truthfully, if somebody said that the new retirement age was 68 instead of 65, I'd have little problem with it. Just make the changes ten years in the future, not a year before I'm due.”
This already is being done. You don't think that the retirement age is fixed at 65 years, currently, do you? It's close, still, but not 65 any longer.
http://www.socialsecurity.gov/retire2/retirecha…
Raising it from 65 to 68 helps reduce costs (think of all the person-years' worth of expenses reduced), but it is to still too low an age. Modern retirement age should be somewhere in the low seventies.
“[T]o sustain the dependency ratios of 1980–2000, the retirement age would have to rise to 72 or 73 by 2030.”
http://www.researchaffiliates.com/ideas/pdf/demographi...
“One way to index the NRA would be for Social Security to provide benefits for the same number of years (i.e., keep the life expectancy at NRA the same). When Social Security was created, life expectancies at 65 were about 12.7 years. If we used this method, the NRA would be around age 72 today.”
“Another way to index the retirement age would be to determine the age that maintains the same ratio of retirement years to working years. … If this idea had been used since the creation of Social Security, the NRA would be age 70 now.”
http://www.actuary.org/pdf/socialsecurity/bunning2.pdf
“Making matters worse, the problem defies an easy solution. Immigration will help but only marginally. Attempting to maintain a constant ratio between working-age and pension-age populations might mean, for example, that 80 percent of Germany’s population in 2050 would consist of immigrants or their progeny. Retirement ages could be raised, but such measures will have no effect on depopulation. Meanwhile, relying solely on longer work lives might mean that, by 2050, the typical European worker would work until his or her late seventies, and the typical Japanese worker until age 83. Child subsidies and other pronatalist policies might help to prevent depopulation, but these measures are costly. If such policies are effective (their record is dubious), they could saddle countries with a double dependency crisis: simultaneous baby booms and senior booms. Many adjustments are needed, but no panaceas exist.”
http://www.twq.com/02spring/hewitt.pdf
I respectfully disagree and I don't care about studies. I approach this pragmatically. If the Germans, and, other European countries, can do it, so can we. I
Retire at 58 in Germany. With all that experience, maybe start a business instead of wasting what energy reserves one might have on some repressive employer trying to squeeze the last bit out of you for him/her self. No U.S. studies on that I'm sure.
DLS, don't forget to adjust for life expectancy based on income group when doing your calculations.
http://www.nytimes.com/2008/03/23/us/23health.html You could be talking plus or minus 3 years.
There are race and sex gaps, as the survival data from the CDC long have shown, but we're not making distinctions there or in any other way. “Community rating” is the rule for “social insurance” sic]. Expected remaining years of life on the average for all persons is the single standard to use when deriving the equivalent of an annunity. (Social Security is more complicated than that, in practice, but needn't and really shouldn't be.)
http://www.cdc.gov/nchs/products/life_tables.htm
* * *
“Retire at 58 in Germany.”
Unrealistic for the future. Retirement reform is already the subject of government scrutiny in Europe (they have no choice — their retirement systems are not only more generous than those of the USA, but their demographic and economic future looks to be worse than that of the USA). Early retirement is known everywhere to be a special problem and one place to look to avoid the problems that have been long known. That's despite work stoppages and demonstrations when even hint of reform happens.
Interesting blog, but it’s missing an important part of the equation: Generation Jones (between the Boomers and Generation X). Google Generation Jones, and you’ll see it’s gotten a ton of media attention, and many top commentators from many top publications and networks (Washington Post, Time magazine, NBC, Newsweek, ABC, etc.) now specifically use this term. In fact, the Associated Press' annual Trend Report chose the Rise of Generation Jones as the #1 trend of 2009. Here's a page with a good overview of recent media interest in GenJones: http://generationjones.com/2009latest.html
It is important to distinguish between the post-WWII demographic boom in births vs. the cultural generations born during that era. Generations are a function of the common formative experiences of its members, not the fertility rates of its parents. And most analysts now see generations as getting shorter (usually 10-15 years now), partly because of the acceleration of culture. Many experts now believe it breaks down more or less this way:
DEMOGRAPHIC boom in babies: 1946-1964
Baby Boom GENERATION: 1942-1953
Generation Jones: 1954-1965
Generation X: 1966-1978
life expectancy”
Thanks for that link. Where you live and other factors also effect LE and morbidity.
Interestingly, people with annuity income also live longer according to some studies.