Four-year-olds would seem a pretty tough crowd to hate. They toddle around, smile a lot, have generally mastered the mystery of the toilet and get wildly excited at the prospect of learning about the world around them.
And yet, as we struggle to protect a teetering Social Security system, they’re the ones taking it in the short pants.
These little people are the ones who will hit age 69 in 2075, the proposed year for America to raise the eligibility age for future Social Security benefits.
Of course, it’s not that simple. And asking today’s 4 year olds to work longer won’t fix all that ails the system.
Without change, Social Security is projected to be broke by 2037. That’s only 27 years away.
Yet even the distant idea of hiking the retirement age to 69 — proposed by President Barack Obama’s bipartisan deficit commission — was called unacceptable by Democratic U.S. Rep. Nancy Pelosi, among many others.
And at first blush, it does seem a bit hard on our preschoolers. They’re being asked to work longer than we will before retirement age. They don’t, after all, have a very good lobby. Still, that’s not really the bad news.
The bad news is that the math doesn’t really work on any level any more. This should not be a surprise, but in Washington, it seems to be.
We’ve all heard the analogy of the pig in a python, the fact that the baby boomers represent more people than their parents’ generation, outnumber their own children and far outnumber their 4-year-old grandchildren. Social Security was a product of President Franklin D. Roosevelt’s New Deal plan to protect workers in the latter stages of life, after retirement. It was set up to benefit those past the retirement age of 65. Despite that, the average age at which workers officially retired was about 68.
Since then, we’ve pushed the retirement age down a bit, allowing early retirement with reduced Social Security benefits at 62. Many Americans now retire at 63 and 64. Folks draw benefits earlier. It doesn’t take an economist to see that expense might be a worrisome issue.
Here’s the rest: We’re living longer. Quite a bit longer.
Now, while that’s good news in a general we’re-not-going-to-die-as-early sense, it’s horrible for an overburdened retirement fund.
In 1940, retiring workers collected benefits for an average of 14 years. Today, that number is up to about 22 years. When today’s 4 year olds retire, retirees would collect Social Security for almost 26 years. In other words, an already beleaguered Social Security system falls farther behind demand.
Eugene Steuerle, a research fellow at The Urban Institute, has some ideas on converting this bad news to, well, less bad news. Few, however, want to hear them.
If, for instance, we were going to draw benefits for as long today as we did when the system was young and healthy, we shouldn’t retire until age 75. As for those 4-year-olds we worry about, their retirement age should bump up to 80.
And while that is not going to be a popular position with anyone in politics or nearing a golden watch, Steuerle suggests a rather immediate boost in the early retirement age would do a lot of financial good, more than we would like to think.
Instead of creating 62-year-old retirees, push back access to the early Social Security benefits by one year to age 63. More people (at least those still-employed individuals) would put more money into the economy, save a bit more on their own and take a bit less out.
Why should we do this? As Steuerle points out, at this moment, one-third of the adult population is retired, and they will live one-third of their lives as retirees. The way the system was set up, workers support retirees. Payments once exceeded payouts by 10 percent, but no more.
The system was never intended to carry this level of burden. Change is needed, and it will be uncomfortable. It won’t be politically easy.
The time, however, for inaction has passed.
Either that or we have to all agree that we really hate 4 year olds.
ABOUT THE WRITER
Matt Schofield is on The Kansas City Star’s Editorial Board. He can be reached at email@example.com.