Commentary | Retirement

How long until quitting time?

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Americans are living longer, so why shouldn’t they work longer?

That’s a prevailing thought in Washington, where lawmakers nine years ago raised the retirement age from 65 to 67 years, and now they are reportedly considering making workers wait even longer to collect full social security benefits.

At first glance, it seems like a sensible and fair way to reverse a projected shortfall in social security. On Wednesday, the Washington Post described Senator Lindsey Graham (R-S.C.) and House Majority Leader Steny Hoyer (D-Md.) as both favoring this approach in recent talks about ways to overhaul the social security system. But research shows that this seemingly logical strategy would actually place a disproportionate burden on lower-income and minority workers, cutting their benefits and shortening their retirement more than for the average worker. Most of the increases in life expectancy made in recent decades have been among higher-income workers. More than a quarter of African American men, for instance, are expected to die before reaching the age of 62, and those who do reach that age continue to have shorter life expectancies than white men.

It’s easy to think of early retirement as exchanging dreary office life for leisurely days on a golf course, but low income workers are often forced to stop working in their early 60s due to poor health and poor job prospects. Many enter retirement after years of blue collar, manual labor that has strained them physically without rewarding them financially. At a time when 401Ks have lost so much value, these workers are highly dependent on social security benefits to have even a basic standard of living.

The current recession, which has been particularly hard on older workers, adds another problem to the notion of raising the retirement age. Recent data shows that older workers who have lost their jobs are particularly challenged in finding new ones and many unemployed workers in their sixties who want to return to work are getting no response. The Chicago Tribune recently featured a 63-year-old former sales executive who had not been called for a single interview during two years of job searching.

There are other options for protecting social security and ensuring that it continues to benefit all workers in their senior years. Since the earnings of most workers have stagnated while those at top end of the income spectrum have skyrocketed, the share of earnings below the current taxable earnings cap of $106,800 has shrunk from 90% in 1983 to 83% today. Raising the cap on social security taxes could help social security again capture 90% of all earnings. Other moves to reverse the long-term stagnation of wages for low-income workers will also create more funds for social security, while simultaneously improving workers’ living standards.


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