Nikki Haley, who’s running for president but won’t be elected, has a Social Security proposal: Raise the retirement age from 67 to 70.
That’s a benefits cut. To be exact, 3 years worth of retirement benefits go to zero. And it forces workers to stay in the workforce longer, regardless of whether their health and physical abilities allow them to keep working. It’s an anti-worker “solution” to Social Security’s fiscal problems.
Haley isn’t the first to propose raising the retirement age. That idea has been around for quite a while, pushed mostly by conservatives.
The argument goes that because people are living longer, they collect more years of Social Security benefits, putting a financial strain on the system. That being the case, it makes sense to raise the retirement age. But that rationale withers on close scrutiny.
Laura Haltzel (profile here), a senior fellow at the Century Foundation (details here) described here as “a leading authority on retirement income, Social Security, Supplemental Security Income, and other social insurance programs,” demolishes it in the March 13, 2023, issue of Barrons magazine (at page 62 of the print edition).
She points out that while average lifespans are increasing, that’s only happening at the higher end of the income scale; at the lower end, longevity is declining. The specific study she cited, of women born between 1930 and 1960, showed that life expectancy increased by 5 years for those with higher incomes, while among those with lower incomes it decreased by 4 years. That’s a 9-year disparity in average lifespans between rich and poor.
What that means, Haltzel says, is raising the retirement age because the well-off are living longer would “punish those who can least afford it.” To explain this, let’s do some simple back-of-envelope math. If you’re in the high-income group that lives 5 years longer, and get 3 years less benefits, you gain 2 years of benefits. If you’re in the low-income group that dies 4 years sooner, and get 3 years less benefits, you lose 7 years of benefits. That oversimplifies it, but this illustrates skew from raising the retirement age if given unequal changes in longevity.
Haley is a Republican, and the GOP is the party of the rich, so it’s not surprising her proposal favors the affluent classes of society at the expense of the working poor. And it callously disregards the fact that many people can’t work until age 70, even if they want to, or are forced to, because of health reasons or declining stamina and strength. Those older workers also are more likely to be caretakers for an ailing spouse or other family member.
Democrats, led by President Biden, are calling instead for raising the income cap on Social Security taxes. However distasteful raising more money for Social Security through taxes may be, the tax increases would fall on those who are most able to afford them — and will get more benefits because they’re living longer. The answer, whatever it is, isn’t taking benefits away from those dying younger, as Haley wants to do.