Tuesday, March 02, 2010

Life Expectancy at Retirement


Greg Mankiw:

Americans, as well as citizens of many other advanced nations, now spend about twice as many years in retirement as they did a generation or two ago.  During that time, they expect the government to provide them with income support and healthcare.  Is it any wonder that we face serious fiscal problems?

I hope the president's fiscal commission makes raising the age of eligibility for these programs one of its main recommendations.

I do too.  A simple change in retirement age could go a long way toward reducing the federal budget.  A lot of people will likely complain that it’s not fair because they don’t get the same benefits as those in the past.  However, as the chart above clearly shows, its the people in the past who only got a fraction of the benefits of retirees today.

Just as many government programs are now indexed to inflation, perhaps age of eligibility for these programs should be indexed to average life expectancy?

1 comment:

thinking said...

Cool idea about the indexing to live expectancy.

Raising the retirement age will require political courage on both sides. I can see the fiscal commission being realistic about this, but I cannot see the Republicans doing anything but demagoguing the issue if it is raised.

The last time the retirement age was raised for social security was when Reagan and the Democrats came together to do so, realizing that both parties had to do this together. Again, I cannot see the Republicans of today acting in such a mature manner.