Discussion: Social Security Reform - Adjustable Retirement Age (Part 2)

Hello Readers,

This is the second part of the discussion based on the post Proposal: Social Security Reform - Adjustable Retirement Age. All of the previous posts in this series are listed at the bottom of this post.

I was asked: "But Sean, if it comes down to it, will you really want to retire at 78?!"

Simply put, no. I do not want to wait that long to retire. I do not think that anybody does. Unfortunately, if nothing changes about the current social security payout process, there will not be any such retirement benefits for my generation at any age! The system will have been bankrupted before I reach my 60s let alone my 70s.

However, I don't know that I would necessarily need to wait so long to retire if my proposal were implemented.  Other than self-funding my retirement until social security kicked in, a combination of 'early retirement' and 'semi-retirement' could be a great option.

Official 'early retirement' is already allowed under the current social security program (allowing participants to collect a lower amount of benefits over a longer period of time). I don't see why this would need to change. I would think that entering early retirement and working part-time at age 73 would be preferable to being required to work full time until my life expectancy of 81 (or longer, as it was pointed out in the comments to the proposal that life expectancy and lifespan can certainly differ).

The question was posed: "What happens when the life expectancy plateaus or declines?" Under my proposal, social security would remain intact. Despite having the name 'social' security, the program was designed such that individuals should not ever collect more in retirement than they contributed while working.

Aligning social security benefits more closely with individual citizen's needs (as opposed to desires for long retirements), the program should also be able to better weather inter-generational fluctuations in the ratio of workers to retirees by decreasing the length of time for which people are entitled to collect social security benefits. Eventually, this may even allow the program to be retuned to take in less and allow more people to save more money individually for retirement.

Every individual would find out what their retirement age is during the decade they turn 50 (between ages 41 and 50). Under current life expectancy conditions, everyone would have 20-30 years or more to plan out their retirement. If life expectancy declines to the point where most people are dying in their 60s or earlier, there would be less time to make plans and save money. Yet, there would also be less time for which plans and funds are required. 

Of course, if the life expectancy in the US falls below 50, my proposal would indeed run into some difficulty. However, I would posit that in such a case 'retirement' would be the least of our worries. This may sound callous, but it is extremely practical.

Finally, I must point out that this progression of posts has attempted to touch upon a topic that could take a couple of books to resolve: reforming social security in order to keep it permanently intact.

To make any progress in this matter, readers must concede that the purpose of social security is to promote the security of our citizens at the end of their lives. It cannot be to fully support multi-decade retirements. To expect a 15-25 year retirement after only working for 40-50 years is simply not sustainable at a country-wide, multi-generational level.

Furthermore, the current program structure exacerbates the problem by requiring significant political momentum to accrue on a regular basis to make the tough decision to alter the retirement age periodically. Thus, with some modifications as brought out in this discussion, my proposal still stands:

The United States government should enact legislation that implements an automatically adjustable retirement age for social security retirement benefits, such that: during the decade in which citizens turn 50 their retirement age will be set at an age that is 3 years less than the average United States life expectancy at the time.

While this will not 'save' social security as it is now, it will certainly go a long way toward making it financially sustainable.

Posts in this series:
The Times They Are 'A Changin'
Proposal: Social Security Reform - Adjustable Retirement Age
Response: Social Security Reform - Adjustable Retirement Age
Discussion: Social Security Reform - Adjustable Retirement Age (Part 1)
Discussion: Social Security Reform - Adjustable Retirement Age (Part 2)

I hope this series helps to start a lively discussion. Please look for the next series of posts related to climate change and national debt, which will discuss: reducing or eliminating farm subsidies that result in overproduction of unhealthy foods.

Cheers,

Sean Diamond