When Rob Wilkens thinks decades ahead to his late 60s, he pictures tooling around the country in a recreational vehicle, not toiling at work.
But a proposal to delay eligibility for full Social Security benefits until 70 is now floating around Washington, with the key endorsement of Federal Reserve Chairman Alan Greenspan. Wilkens, a 23-year-old college senior, would be affected. Most likely, so would younger baby boomers, Generation Xers and those born after them.
The combination of a shaky future for the Social Security fund and longer average life spans has led to consideration of a later retirement age.
“We’ve added (many) years to the average life span, and we haven’t raised the retirement age. It just doesn’t make any sense,” said Richard Thau, who heads a New York group called Third Millennium that represents the Generation Xers, born between 1965 and the late 1970s.
Thau wants to know why he should be paying taxes to support retirees who are perfectly healthy but choose to play golf or watch television instead of working into their late 60s.
He’s not the only one wondering as Congress begins looking at Social Security changes.
“It’s one of the very live and real options,” said David Certner of the American Association of Retired Persons, which is withholding judgment on the retirement-age increase until it hears what else is being considered to shore up Social Security.
The Social Security system is scheduled to run short of money beginning in 2029. By then the mass of baby boomers collecting benefits will outweigh the amount that workers pay in taxes into the Social Security Trust Fund.
So Congress is working on changes that will give people more time to plan and to prevent more severe action later.
A Senate Budget Committee task force led by Sen. Judd Gregg, R-N.H., kicked off Nov. 20 with testimony from Greenspan. Aside from being the czar of the U.S. money supply, Greenspan is an expert on Social Security. He headed the 1983 commission that made the last major changes to Social Security.
Greenspan said it would help to raise the retirement age “to keep pace with increases in life expectancy.”
Already there is support from young people worried the Social Security system will otherwise run out of money before they retire.
Indicative of the problem, in the first years of Social Security, there were more than 40 workers paying taxes into the system for every person collecting benefits. Now there are 3.3 workers for every beneficiary, and the number of workers is dropping.
Despite the financial problems of the system, senior citizens have jealously guarded their benefits against change. And the political clout of the elderly has scared off politicians in the past.
But the higher retirement age would not affect anyone for years, which could lessen the political heat. And some of the younger voters, such as Thau, would rather have the later retirement age than have the system go broke on them.
Not everyone agrees. Shoe-shiner Dwayne Whitehead of Orlando, Fla., said many of the black men from his neighborhood will not live long enough to collect Social Security benefits at age 70. “The American people need to be entitled to the same (as) the generation before us had,” said Whitehead, 31.
Life span has increased dramatically since Social Security first started paying benefits in 1940. Men retiring that year could expect to live an additional 11.9 years. Now, they can expect to live 15.5 more years. For women, the life span after 65 has jumped from 13.4 years to 19.2 years.
Raising the retirement age helps the Social Security balance sheet two ways. Workers draw benefits for fewer years. And they pay Social Security taxes for more years as workers.
But what about blue-collar workers with physically demanding jobs?
“You don’t want coal miners working until 69 and a half,” said Thau of the Generation X group. “You don’t necessarily want truck drivers driving semis at 69 and a half. They become a danger to themselves and other people.”
However, Butler said fewer U.S. jobs depend on brawn instead of brains. And for those who can’t physically do their jobs into their late 60s, some sort of disability coverage could be offered, he said.
The later-retirement-age proposal runs counter to recent U.S. trends toward earlier retirement. Half of all workers tap into Social Security at age 62. That boom has been driven partly by corporate actions to induce older workers to retire early. Younger workers often carry lower salaries and much lower health-care costs.
“You have to be a little bit realistic about the private marketplace right now,” Certner of AARP said. “People don’t really want older workers around.” But Butler, who favors stronger bans on age discrimination, said the early-retirement trend has started to reverse. People are deciding to work longer because they are healthier and they are worried about running out of money, he said.
Social Security benefits are available beginning at age 62, with the benefit reduced about 7 percent for every year younger than 65.
If the age is raised to 70, retiring at age 62 would cost workers half their Social Security check, said Howe, the generational historian. For many people, that will mean they can’t afford to retire early, he said.
Social Security’s average monthly benefit for a single person is $750, Certner said. Even though the program was intended merely to supplement savings and pensions, too many recipients rely on that Social Security check for 90 percent of their income, he said.
Even though elderly people today would not be affected, they still will oppose a higher retirement age out of fear they would be hurt, Thau predicted. “The politics are crummy,” he said.
But the move is not unprecedented. Social Security’s normal retirement age already is being slowly increased to 67. Anyone born after 1960 will not get full benefits until that age.
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