11 May 2011

The age you get SS benefits is not a retirement age

Older workers: Take this job and retire from it | The Economist

I like this Ezra Klein post on Social Security, and I especially appreciate this thought:
Most opinion elites — [Simpson-Bowles Deficit Commission Co-Chairman Alan] Simpson being one good example, and the U.S. Senate being another — show a very strong preference for working as long as possible. Most Americans show a very strong preference for retiring as early as possible. Elites who enjoy their jobs need to be very careful about generalizing their experience to people who don’t enjoy their jobs. More bluntly: Raising the retirement age is the worst of all possible options for reforming Social Security. It’s not only regressive, but it also falls most heavily on those with the worst jobs. Means-testing would be much better.
[...] Workers seem to be demonstrating that they put a substantial value on earlier retirement, which means that a rise in the retirement age would have a bigger negative impact on utility than you might imagine.
Now hold on just one second.

(0) I'm all for means-testing, as long as it is done based on lifetime earnings and not savings.  Social security is a welfare program, plain and simple, and it ought to act like it.

(1) Of course people show a preference for retiring — i.e. not working, i.e. continuing to consume without producing — earlier. That's a bit like observing that students show a preference for not having to go to class. People always show a preference for getting free lunches. That's not a serious argument for giving out free lunches.

(2) The age you are eligible for social security checks is not a minimum retirement age. You can retire whenever you damn well please. It is extremely unwise to do so until you have reached a point where your savings can cover your expected future consumption. But when that point happens and when SS checks start coming your way are two independent things.

No getting largess from the state is not the same as being forced to continue working. Getting largess is not the same as being prohibited from working.

Your actual retirement age is a function of the difference between your earning and your consumption. It is not legislated by congress.  Many acts of congress do change when people can amass sufficient savings, and perversely, many of them delay that point. (I'm looking at you, capital gains taxes.*)

(3) Society does not owe anyone the opportunity to stop producing and continue consuming, especially not if they are still able to work. Someone who is producing doesn't have a duty to turn over some of their fruits to their neighbor just because the neighbor has blown out their 62nd or 65th or 70th birthday candle.

A 65 year old who is unable to provide for themselves through some disability may deserve our help, but that is equally true of a 45 year old or a 20 year old.

(5) Taking care of those unable to help themselves is fine and admirable. Maybe we even want to mediate such charity through the state. But basing the discrimination of the deserving from the undeserving solely on age is a tremendously noisy and inefficient way to do that. Born before the threshold? Have some free lunch. Under it? Tough shit. That's not even a decision making process. It's a stump.

* Also things like this pension tax in Ireland, which is supposed to be temporary but I would stake good money will not be.  I also predict it is coming to America.  Krugerrands are looking more attractive to me.

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