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DonateMany Americans expect to retire at 65, but beginning in 1983, the age of eligibility for full Social Security benefits began gradually increasing to 67. Social Security provides at least half of the income for the elderly to enjoy their golden years. Unfortunately, Social Security’s cash reserves are expected to run out by 2034. If the gap between payroll taxes and cash reserves isn’t resolved, retirees could get lower payments and workers might need to pay more into the system. People arguing “yes” to raising the retirement age say people are now living longer and continuing to work, which could lead to economic growth. Those arguing “no” say that not everyone is able to or can afford to work longer and it’ll mean a large cut in benefits, making the program worse or unhelpful for the next generations.
With this background, we debate: Should the Government Raise the Retirement Age?
John Donvan
Hi, everybody, and welcome to Open to Debate. I’m John Donvan. So here’s the good news, good in most ways, anyway. Americans are living a lot longer than they used to, more than a decade longer these days than in 1960, but that also creates a problem, Social Security, the safety net program designed to help seniors survive financially once they stop working, once they retire. The problem is that the relative percentage of the population retiring keeps getting bigger while the percentage of the population paying into the system is generally getting smaller. Solid and somber predictions say that we are eight to 10 years away from the Social Security trust funds running out.
John Donvan
Now, the system faced a similar crisis 40 years ago and one of the fixes used then was a gradual raise in the retirement age from 65 back then to 67 today. Should that be tried now? It’s got some history behind it, but it’s also facing some strong pushback. Listen to this for a taste of how much pushback there can be. This is France, where a move to raise the retirement age led to massive protests and strikes earlier this year.
John Donvan
The how and the why of both sides of the argument are what we are about to explore here as we debate this question, should the government raise the retirement age? So let’s meet our debaters. Arguing that the answer to that question is yes, Senior Vice President and Senior Policy Director for the Committee for a Responsible Federal Budget Marc Goldwein. Marc, thanks so much for joining us at Open to Debate.
John Donvan
And answering no to the question, should the government raise the retirement age, Irene and Bernard L. Schwartz Professor of Economics and Policy Analysis at the New School, Teresa Ghilarducci. Welcome, Teresa, to Open to Debate.
John Donvan
So just before we start, I would love to get a sense from both of you about why you care about this, why you said yes to a debate on this topic. So I’ll go to you first, Marc. What, what are the stakes for you in this argument? What do you wanna take on on this topic with us?
Marc Goldwein
Well, look, I, I’m a Social Security nerd. I’ve been interested in this topic since, uh, college. I’ve continued to focus on this issue through my whole career. So I’m just so glad to get the opportunity to, uh, to chat with all of you about it.
John Donvan
Teresa, this is your turn. Same question to you. You, you said yes to debate on the topic. So you obviously have some stakes in this. What are they?
Teresa Ghilarducci
Yeah, um, like Marc, I’ve been a Social Security nerd ever since school as well, and was asked to testify in Congress, um, when Reagan cut Social Security. But the stake in this is not just intellectual. The stake is also very personal. I live mostly with my grandmother and mostly on government programs. So in my head, I had to care about fiscal responsibility and care about economic fixes because I’m an economist, and in my heart, I was also quite concerned about my grandmother and my mother’s, um, financial future as low wage and low income people.
John Donvan
All right. Teresa, thank you very much. You’re now going to argue with one another about and, Marc, you’re up first. We want each of you to explain your position on the question, should the government raise the retirement age? You’re up first, Marc. Your answer is yes. Tell us why.
Marc Goldwein
Uh, so I think raising the Social Security retirement age is one of the smartest things we can do to strengthen that program. I think that for fiscal reasons, for economic reasons, and for social welfare reasons. Fiscally, the Social Security trust fund is only 10 years from insolvency. That means a young retiree today will be 72 years old when the program has to cut their benefits across the board by 23%. That’s what happens if we don’t do anything to solve it.
Marc Goldwein
Now, personally, uh, I would address this mainly from high earners. We need to do the equivalent of either raising taxes by a third, cutting benefits by a quarter or some combination. I would do this mainly by increasing the taxes paid and adjusting the benefits received for high earners. But raising the Social Security reform age can and should be a part of the solution. Uh, just indexing it to longevity would close a fifth of two-fifths of the gap.
Marc Goldwein
Secondly, there’s an important economic imperative. Historically, the US has grown about 3% year over year. We’ll be lucky over the next quarter century if we’re able to grow 2% year over year. We’re headed towards more like 1.5%. And the key reason for this slow growth is the aging of the population. Our labor force is no longer growing. We are no longer building more savers that are becoming more investors, and our productivity is suffering.
Marc Goldwein
Again, we’re not gonna go back to the good old days of 3% growth, but there’s untapped potential to strengthen our labor force by looking to older workers. Uh, there’s some estimates out there that each one year delay in retirement means a 2% to 3% increase in gross domestic product, substantial increase in output.
Marc Goldwein
And thirdly, uh, working longer provides huge benefits to many older workers, not to everyone. Everyone’s different, but when we look at, at the literature, on average, most people are better off by delaying their retirement. They’re obviously better off financially. The Urban Institute has done some great research. Basically, every one year you delay retirement boosts your income in retirement by about 10%. That’s because you have one year less that year withdrawing from your savings and one year more that year contributing to them. So it’s good, it’s good economically for families, but it’s also good, it turns out, on a whole host of other reasons.
Marc Goldwein
People that retire later, as a result, the literature shows, live longer, they’re physically healthier, they’re mentally healthier, they have stronger social networks, they spend less time at home drinking and watching TV. On every front, the average worker is better off by delaying retirement a little bit. And this can help send those kinds of powerful signals to help people retire.
Marc Goldwein
Uh, now, this is not some radical idea that we would raise the retirement age. In 1965, 60% of those aged 65 worked. Right before the pandemic, that was 50%. And if you adjust for changes in, in longevity as the Urban Institute has done, it’s more like the equivalent of 25%. So what we’ve seen is that even as people are living longer, even as they’re healthier overall, even as jobs have become less physically intensive, people have been retiring earlier, not later.
Marc Goldwein
And I’m not suggesting we turn that over overnight, but for example, a plan that, uh, Teresa, my debate opponent, supported from the Bipartisan Policy Center would raise the age by two years over a 50-year period. I think that gives workers enough time to plan and adjust.
John Donvan
Thank you very much, Marc. And now, uh, Teresa, it’s your turn. Again, to remind listeners on the question, should the government raise the retirement age, you are a clear no and you have four minutes to tell us why.
Teresa Ghilarducci
And that’s because raising the retirement age to age 70 has nothing to do with work or health or, or even retirement. It’s just a cut in benefits across the board. Raising the retirement age, as, uh, Marc proposes, would cut benefits for everybody by 13% to 15%. That means the average monthly Social Security benefit, which is only now $1800 per month, would fall to under poverty levels at 1500, way under.
Teresa Ghilarducci
So there are five main reasons we should not cut Social Security benefits by raising the retirement age. It’s a very bad idea, a very bad way to handle the coming deficit. First, there are plenty of non-regressive, growth-promoting ways to raise money to pay full Social Security benefits. We could roll back the Trump tax cuts for the wealthy, and we could lift the tax cap on high earners.
Teresa Ghilarducci
Um, second, raising the retirement age and cutting benefits to force financially strapped elders to look for work because employers some time in the future might have to improve pay and working conditions for everybody else under 65 is not good policy.
Teresa Ghilarducci
And third, thinking that when we raise the retirement age and cut benefits people will just merely decide to work a little bit longer and claim a higher Social Security benefit later is just wrong thinking. It’s not the way that older workers are acting right now. Increasingly, older workers are claiming their drastically reduced early Social Security benefits in order to supplement their low wages.
Teresa Ghilarducci
Um, by age 67, 90% of low wage workers, they’re working, they’re aged 67, they’ve already collected their reduced Social Security benefit. So cutting it more would just mean that their lifetime incomes will be a lot lower. You know, and working longer isn’t just so easy. You know, you can’t just decide to work another couple of years. We can’t even fully employ workers under 62. Only about half of Americans are continuously employed between ages 51 and 61.
Teresa Ghilarducci
And fourth, that believing that raising the retirement age and forcing people to work longer is good for people flies in the face of the latest and the best research. Voluntary retirement for most people enhances their health and wellbeing. Working longer for most people, especially for the middle class and below, hastens morbidity and death, brings on depression, and can prolong pain, the pain that comes from a lifelong career and working in jobs where you don’t control the pays and content of the physical and mental stresses of those jobs.
Teresa Ghilarducci
So I think Marc is confusing voluntary retirement with involuntary retirement, lot of researchers do. And longevity indexing is presuming that everybody is living, um, longer, but, uh, everybody is living longer. Most of the longevity gains have gone to the top half.
Teresa Ghilarducci
So why are we even talking about cutting benefits by raising the retirement age? Whether political forces in Washington like the committee that are dedicated to convincing the media that the deficit is the most urgent issue and spending cuts is the only way we can reduce the benefit. Fortunately, there are longstanding reasonable proposals in Congress already vetted by the Social Security administration to close the funding gap without cutting benefits.
Teresa Ghilarducci
And fortunately, 65% of likely voters, including 59% of Republican voters, opposes raising the retirement age. Cuts aren’t necessary. There are plenty of ways to pay for Social Security. Cuts by raising the Social Secu- the retirement age will not improve jobs or increase employment. The cuts will just make our already very high elderly poverty rates much higher and it would hasten the downward mobility of older workers who are already predicted to be poor and near poor in retirement.
John Donvan
Thank you very much, Teresa, and thank you, Marc. So I, in, in the spirit of Open to Debate, where we consider part of the process is to be listening, I’ve been listening to both of you, and I would like to share with you what I think I’ve heard you both make as your argument. Neither of you disputes and I think you agree that something needs to be done just because of the economics of the situation. As, Marc, po- you pointed out that the, the system is 10 years away from reaching its limit. There are several solutions, but you’re making the case that, uh, raising the retirement age can and should be part of the solution. Your argument goes not only to the financial side of it, but also to a kind of social side. There is untapped potential on older workers, that having those workers remain in the economy would be good for the economy. You’re saying that it would enhance growth.
John Donvan
You’re also saying that it would be good for them kind of holistically, that for some of them, they’re, uh, likely to live longer and be healthier and have better outcomes in terms of things like depression and a sense of participation in society. And, Marc, I wanna ask you, did I hear what you, your argument correctly?
John Donvan
Okay. I just wanna be clear on that. Now, to the no side, Teresa, you’re making the argument that cuts are not necessary because there are other ways. Um, you talked about potentially some of the other ways, but the focus of your argument was on what’s wrong with raising the retirement age. You point out that there’s some inequity in who can actually potentially benefit from working longer, that for the most part there’s a negative impact on people who, uh, who may not be healthy enough to work, who are doing so in an involuntary way. Uh, you said that it can lead to things like the opposite, depression, and early death, and health problems. So I wanna ask you as well, Teresa. Have I capture the gist of your argument so that we can move forward and discuss in more detail?
John Donvan
Thank you, Teresa, and thank you, Marc. We’re gonna get into that conversation when we return. We’ll be back in just a moment. We’re asking whether the government should raise the retirement age. This is Open to Debate, and we’ll be right back.
John Donvan
Welcome back to Open to Debate. We are debating this question, should the government raise the retirement age? We have heard opening statements from Marc Goldwein and Teresa Ghilarducci. And, um, what, w- what I wanna get to right away, uh, to you, Marc, is Teresa’s point that there’s a very big difference between the glories of voluntary retirement with a little bit of a stipend, maybe for some people a lot of it is stipend depending on their needs, that comes from Social Security and those who don’t really want to be working in the workforce.
Marc Goldwein
Well, so f- first of all, I, I thought we were gonna have a policy debate, but Teresa seems to wanna jump right into ad hominem attack. So I think it’s important to set the record straight. The Committee for Responsible Federal Budget for which I work, um, strongly supports new revenue. We were maybe the, the most out there out front group opposing the Trump tax cuts. We constantly push for new revenue. In my opening, I talked about raising the tax max or otherwise bring revenue in the Social Security. So this is just false and not, not at all what I or my organization is talking about. There’s not some like special interest of people, at, at least not people that I work of that just wanna make, uh, seniorsy cat food or whatever the accusation is.
Marc Goldwein
Uh, here’s the reality. Social Security faces a substantial gap between what it spends and what it brings in in revenue. And the rest of the government also is underfunded. Um, we’re gonna have to address that gap through some combination of, of approaches of which I think raising the age should be part of that mix. As we look at seniors that are entering retirement, um, what we see is that for the most part, they are doing okay. Uh, seniors five years after, uh, retirement are making about the same income as before their retirement. There is a group of seniors, um, that I’m very, and near seniors that I’m very worried about that the program leaves behind. Uh, that’s partially because we pay, you know, the wealthiest couples can get $100,000 in Social Security benefits right now, and yet some people get, have benefit levels that are below poverty. And so what we need to do is focus on changing the, the formula to protect the people that need protecting, not to provide more benefits and more years of work for everybody regardless of need.
Teresa Ghilarducci
Yeah, sure, Marc. I’m, I’m sorry to have offended you. Um, your committee’s brief on raising the retirement age. Social Se- uh, Social Security really talked about the deficit and solving it by cutting the benefits. So I have not seen, um, all your fall over. So I do apologize for that, but, um, John and Marc, raising the retirement age has nothing to do with bringing in older people into the workforce, has nothing to do with making their jobs better, nothing to do to raise the pay for home healthcare workers, where most of them will be older women, uh, working in those jobs. There’s nothing about improving their productivity or their health. It’s just to cut in benefits.
Teresa Ghilarducci
There’s a hope that somehow the desperation because they will have a 15% cut in benefits will get them to work, but there’s nothing about actually making that work productive, wholesome, high pay or even decently paid. So this is not a work program for the elderly or productivity program for the country. It’s just a cut in benefits.
Marc Goldwein
Yeah, and I think we should put this 15% cut in context. Uh, what Teresa is talking about is the full cut for a new retiree. Raising the retirement age is a form of across the board benefit cut that exempts people with disabilities and some widows, but that 15% is the reduction 75 years down the line when according to the Social Security administration, benefits adjusted for inflation will be almost three times as large as they are today. So what we are talking about is gradually slowing the growth of benefits over time in order to help avoid, along with other proposals, an immediate 23% cut that would happen in a decade from now.
John Donvan
Can you explain why, why that would happen in a decade from now? And I know it’s in the law, but if you can talk about that.
Marc Goldwein
The, what the law says is that when Social Security trust fund runs out, we can only pay in benefits what we’re bringing in revenue, and we’re not bringing enough. Uh, it’s also important to note that while raising the retirement age does not force anybody to work longer, it does send a very powerful signal to people [inaudible
Marc Goldwein
When we look at the ages that people are, are retiring the most, it’s the early age, it’s the Medicare age, it’s the normal age. People look at these for, for guidance on when to retire, and we’ve seen it as we’ve raised the age from 65 to 67 that people delay their retirement in course up until the pandemic, of course.
Teresa Ghilarducci
Uh, we do agree, um, on the numbers, and that’s what’s so good about the Social Security administration, really putting into account when they make their forecast things like the dependency ratio, things like people getting older, things like people, um, you know, not, um, you know, uh, not having enough, um, babies, you know, to, um, uh, to keep the dependency ratios where they were. So all that has been built in and we have 10 years, um, to bring in more revenue for Social Security.
Teresa Ghilarducci
The reason I am so adamant that this is not the time to cut Social Security benefits is because I see that the United States has the highest elderly poverty rate among all of our peers, and it’s rising. I also see that middle class, um, workers who are approaching retirement age, because the 401(k) system never met its promise, will be poor or near poor when they reach retirement because Social Security in terms of pre-retirement income has the lowers replacement rate than any other nation. So we already are on a platform of a very stingy system. Most people don’t have any retirement accounts and the Social Security benefits will not keep people out of poverty.
John Donvan
So Marc, let me repeat what I think I hear Teresa is saying as her main concern is that if these, if, if, you know, let’s say that the law were to change, let’s say I move to ’69 or ’70s, so the people who are now required to find some other way to fund their lives, whether they’re working or not working between the ages of 68 and 70, that they’re kind of in a very, very bad situation because poverty levels are high, because they didn’t save enough, because they don’t have 401(k)s and that, uh, between now and 10 years from now, that also represents a crisis. Can you take that on?
Marc Goldwein
Yeah. I j- I don’t think that the data that Teresa’s presented reflects reality. Uh, when we look at survey data, senior poverty looks high. By the way, still lower than any other group like, um, like children. But when we look at actual tax data as Mitchell and Bee has done, we know, we’ve learned that we’re overstating it pretty dramatically.
Marc Goldwein
Uh, the United States has the highest retirement income of any country in the OECD other than Luxembourg, and we never count Luxembourg. Um, even it’s sort of relative to lifetime income, we’re in the top, we’re in the top 30% or so. Most seniors are doing okay and to tell them that seniors 50 years from now would have to work two more years if they want to make up for all of their lost benefits.
Marc Goldwein
By the way, 75 years from now, I’d have to work three more years at a time that life expectancy is up four years, that benefits have tripled, um, I don’t think that’s such of a, uh, imposition relative to the 23% cut that they face today.
John Donvan
Are you saying without that move in the, um, retirement age that the system is doomed between now and 10 years from now?
Marc Goldwein
No, the system isn’t doomed. I’m, I’m an optimist. There are many solutions. Now, I’m gonna give a positive plug. Uh, if you visit socialsecurityreformer.org, um, on our website, you can develop your own plan that’s any kind of mix or changes to the taxes and benefits. Uh, retirement age is not a vital component to Social Security solvency, but it makes the plan a lot smarter, and it’s certainly better than the equivalent across the board benefit cut that does hit people with disabilities and that doesn’t send the signals for people to work longer.
Teresa Ghilarducci
There are ways to raise benefits and actually raise revenue that solve the problem that I see coming to us. We have a tsunami of 55 to 61-year-olds. I already told you that only half of them have been continuously employed for the last years before they reach retirement age. They have not had the Social S- the, uh, 401(k) buildup. They’ve been really hammered by the 2008 financial crisis. So that’s my demographic. Those near retirees are going to hit, um, age 62, 65 without the kind of platform that their parents and grandparents, um, had. Um, so that’s one thing. So but-
John Donvan
… would have a retirement age that’s somewhere between no later and a couple of months later ’cause we’re talking about a very gradual change.
Teresa Ghilarducci
Yeah. Have you seen the data on people who are forced out of the labor market way before they plan? You’re talking as if people can actually look at a spreadsheet, sit at a kitchen table, and decide with their, with their partner how long they’re going to work. It turns out that layoffs, age discrimination, um, health ef- uh, effects come suddenly and the needs of their spouse pushes 51% of people who are retired now to say, “I retired a lot earlier than I planned.”
Teresa Ghilarducci
Marc, I’ll join with you to improve the labor market for older workers. I’ll go hand-in-hand with you to increase retirement benefits so that people can retire or work. I’ll go hand-in-hand with you to fight age discrimination, but it is not smart policy to cut benefits presuming people can work longer.
John Donvan
You, you just made a point two sentences back that I’d like Marc to take on when you talked about the numbers of people who, who can’t get a good job, who have pushed out of their job, who haven’t saved the money, who don’t have a kind of quick option to pick up a good job because they need to work a few years longer. Marc, that sounds like a real thing to me. Um, so I’d like you to address that critique of the idea of raising the retirement age.
Marc Goldwein
Yeah, i- it’s a real thing in the sense that this happens to real people, right? And in that, um, I, um, I’m with Teresa in doing more to improve work opportunities for older workers and strengthening the safety, safety net. But it’s, it’s not so much a real thing when we look macroeconomically in the current circumstance. What we see, if anything, um, is insufficient labor supply to meet the demand. Now, that’s, that’s different from when there’s health issues, but there’s not a situation here where there are a bunch of, you know, workers in their 60s making up a, a meaningful amount that are trying to get jobs and there are bunch of employers that just aren’t hiring them. That is happening in individual cases as it does at every age as it get harder for people, but it’s not happening everywhere.
Marc Goldwein
And the way we strengthen this is the same way that we address some of the other issues that Teresa’s mentioned, which is that we need a much more progressive Social Security system. It doesn’t make sense. The wealthiest couples retiring today will get $100,000, retiring next year will get $100,000 a year of Social Security benefits.
Marc Goldwein
Fast forward, you know, 50 years from now, it’s 250,000 or, or so in today’s dollars. There’s plenty of money for us to take just a little bit of that from the highest earners going forward. Um, and you said to strengthen benefits for the lowest earners.
John Donvan
You both do seem to agree on the idea that people of higher means should be contributing more and receiving fewer benefits because they don’t really need it.
Marc Goldwein
I don’t Teresa agrees on receiving fewer benefits, but we both agree they should be contributing more.
John Donvan
Marc, the age discrimination point that Teresa brought up in terms of, you know, these kinds of jobs that you’re 65 years old and you’ve gotta work for three or four more years. How good a job can you get depending on your skill level?
Marc Goldwein
Yeah. This is something I worry about, and age discrimination is not an easy issue because if the rules are too strict, they actually, um, they, they ironically can, can worsen it because there’s no room to offer different types of jobs. It’s really hard, uh, if productivity is going up or salary goes down, but if they’re too loose, um, uh, seniors can be out of job. And so this is a, a, an area that I, I take very seriously and I know Teresa does too. And, and, um, we need sort of a comprehensive solution to look at retirement.
Marc Goldwein
But again, a 65-year-old today is not gonna be very different from a 67-year-old 50 years from now. A 67-year-old is not gonna be very different from a 69-year-old. And so we need think. Would we, would our optimal policy be to lower the retirement age? To me, if I’m thinking about what’s the best way to, to, uh, boost benefits at the bottom? The number one would be for people that need it. Number one would be a targeted benefit approach towards those who need it. Number two would be something that’s d- flat dollar across the board. Number three would be flat percentage, and maybe the worst one would be, “Here’s a policy that raises benefits across the board for everybody no matter how rich you are, unless you’re disabled or a widow and discouraged to see from working and earning more.” That would be just about the worst policy.
John Donvan
Marc, you, you made a point in your opening, the nuance of which I’m not sure I fully grasp, but, but you said the fact that the retirement age currently stands at 67 kind of tells folks out there that’s when you retire, that you, you create the arc of your, I think you’re saying you kind of create the arc of your work life to be winding down by the time you’re 67. And I’m not sure what’s wrong with that or what’s right about that.
Marc Goldwein
Yeah. My point here was Tere- Teresa made the correct point that when you raise the normal retirement age, what you’re doing is reducing benefits. At the pace that I were doing it, you’re, you’re reducing them 15%. Over a period they’re increasing 300%. So it’s really slowing the growth, but you are reducing the benefit received at any given age. But this isn’t the same as just a regular 5% across the board benefit cut because it comes with it a signal, right? And that signal has meaningful economic effects, uh, both at the individual level and at the macroeconomic level.
Marc Goldwein
Yeah. I mean, that, that signal basically is one of the guidepost that people use to decide when to retire. Now, a bigger problem, which maybe Teresa and I can also work together on is the federal government has about 50 of these guideposts now through the tax code, through the regulatory code, through Social Security. So it’s hard for seniors to figure out or workers to figure out which ones to listen to, but Social Security is kind of the biggest one. And so 62, the age you can receive benefits, is a meaningful year. 67, that full age, is a meaningful year even though there’s not really a difference between retiring at 67 and 68, um, from, for sort of a lifetime benefits perspective.
John Donvan
Okay. I wanna let … Teresa, you’ve been patient for the last few minutes. Can you take on this question about the signal that’s being said.
Teresa Ghilarducci
Yeah, Marc, no, that, that’s something that we’ve heard about like 30 years ago, and signals are important for behavior, and people, um, because they have been, um, getting more educated, older people are working a little bit longer, but the signal is not the same thing as being able to work longer. So I don’t know how important that signal is anymore, Marc.
Teresa Ghilarducci
Um, most everybody, all the research is showing, knows that if they wait to collect Social Security later they’ll get a big bonus. I mean, it’s a huge bonus.
Teresa Ghilarducci
They’re not doing it because they can’t, either because they have to retire … My, my cousin just told me. She’s a nurse and she had to retire and collect at 64. She had no choice. And she even downsized and did everything she could, but her husband became disabled. Um, what is she supposed to do? Also, I’m really horrified that people are continuing to work and not doing what Marc hopes they do, wait and claim later, but they’re having to collect Social Security in order to, um, stretch their paycheck.
Teresa Ghilarducci
Collecting. So the signal just doesn’t matter anymore. Um, it is regressive. Um, 70, only five, uh, 10, 9% of people are collecting at 70, but they get this huge bonus.
John Donvan
We’ve asked some journalists to join the conversation who cover this topic, and I wanna bring one of them in right now, and that’s Mark Miller, um, who’s a personal finance writer, uh, for the New York Times and for Reuters, and he has a book coming out called Retirement Reboot: Commonsense Financial Strategies for Getting Back on Track. And this is his question to us and I, I want to go to you first to answer, Teresa.
Mark Miller
Hi. I’m Mark Miller. So when we think about a higher retirement age and people working longer and we think about longevity, and we also know that those, uh, those gains and longevity and the ability to work longer, those are not evenly distributed across the entire population, which is the critical issue when we talk about a program like Social Security, which is universal. And so my question about yet another increase in the retirement age is this, is that, how that going to be equitable across the entire population? Thank you very much.
Teresa Ghilarducci
The problem is is that most longevity gains have gone to the people on the top half of the, of the earnings distribution. Um, and we used to actually live longer together. When Social Security benefits increased and Medicare came in, we really brought up the health, um, and wellbeing of people at the bottom, but when after Reagan and Congress, um, cut benefits, we saw a big widening in life expectancy.
Teresa Ghilarducci
And so making people work until age 67 or even 70 means that you’re cutting short the retirement, um, lives of people in the bottom half of the administra- of the, um, distribution. You’re saying, “Oh, you only catch a break from paid work for four or five years, um, and even be healthy,” um, but for the top half, um, you get to live another 15 years.
Teresa Ghilarducci
So what we’re doing if we cut benefits and make people work longer is really cutting the distribution of retirement time and healthy retirement time across the population, and that just sickens me, actually. Um, uh, I go from my head to my heart to say that that’s just not fair.
Marc Goldwein
We need everybody living longer by getting at the social determinants of health, the healthcare system, but the fact that there’s this differential in longevity, this doesn’t actually make raising the retirement age regressive. What it makes regressive is the lifetime annuity benefit under Social Security. It’s the fact that Social Security provides a benefit forever that causes changes in life expectancy to make it more regressive.
Marc Goldwein
The solution, of course, is not to say you only get X years of Social Security. That will be crazy. But the solution is to look to the part of the Social Security reform formula that deals with changes in progressivity. That’s mainly what’s called the PIA formula, the formula that is progressive but, in my opinion, not progressive enough in designing the benefits. I’d also go further in two ways, first of all a minimum benefit, and secondly I’ve also actually designed a specific type of minimum benefit I call the age 62 poverty protection benefit that limits the effect effectively, insulates the effect of any age increase on the lowest earners because you don’t wanna cut their benefits. The lowest earners actually need more money in retirement. The issue is we don’t need to give more money to the wealthiest people in order to give more money to the poorest people.
John Donvan
All right. We’re gonna leave it there as we take a break. When we return, we’re gonna bring in some more voices with questions around our question, which is, should the government raise the retirement age? I’m John Donvan. This is Open to Debate, and we’ll be right back.
John Donvan
Welcome back to Open to Debate. I’m John Donvan. I am joined by Teresa Ghilarducci and Marc Goldwein, and we are debating this question, should the government raise the retirement age? There’s a question I wanted to put each, to each of you. We’ve been talking a lot throughout the debate about the impact on older workers. Why should younger workers listening to this debate care? What’s at stake for them if anything? Uh, Teresa, take that on first, please.
Teresa Ghilarducci
Yes. Um, Social Security is very much an intergenerational program. We just did some research to show how many adult workers are taking care of their elderly parents. And again, the, they’re taking care of them in terms of time and, and money, and they’re doing it because their Social Security benefits are already too low and they don’t have, um, other kinds of pensions. Um, if the Social Security benefits go even lower or don’t increase, then that burden on, um, mothers and, uh, workers, mostly mothers, but sometimes fathers too and sons, uh, will be even greater. So Social Security is very important for the whole family. Also, over four million children, um, get Social Security benefits and there is a high rate of disability in this country, where much younger, um, people, um, rely on Social Security, um, as well.
Marc Goldwein
Yeah. So first and foremost, we need to save Social Security from insolvency for those that are on the program today. You know, my, my mother, uh, is, is going to … I shouldn’t say her age, but my mother is still gonna be on the program, um, for quite a few years after that 23% across the board benefit cut, but my child is gonna be 18 when that cut happens. And under the current law, we have no way in place to make sure that those benefits are there for our, ourselves, for our kids, for our, our grandkids.
John Donvan
I, I have another question related to the age issue. I’m wondering what the impact would be for younger workers if older workers are not moving on and vacating spots, uh, et cetera, like holding on to jobs. Is that a positive or a negative or not really an issue at all? If you could take that on first, Teresa.
Teresa Ghilarducci
Yeah, I will. Uh, I think Marc and I will agree that, in general, having more workers to an economy is a good thing. Uh, we’re not gonna disagree, but there are some occupations, um, where older people, um, do reach their peak, you know, before they’re 67. They’ve reached their peak in their 50s. Um, and hanging on to their jobs, um, actually does block, um, job opportunities for people who are more productive and, and really need the work. And I’m thinking about my profession as a professor.
Teresa Ghilarducci
Um, you know, we have these English professors. Um, I quoted one in one, in an article I wrote in, in one of my books who said, “You know, I should be retiring from Yale. Um, I’m in my 70s, but I wanna work a few more years to get a little extra money.” In the meantime, he’s graduating three or four PhDs in English, um, who actually one of them came to try to get a PhD, another PhD at the, at the New School. So um, there are occupations where older people are hanging on to their jobs and are not leaving room for advancement.
Marc Goldwein
Yeah. So I, I, I think productivity and the, uh, economics profession will benefit from Teresa working more years past retire- past the normal retirement age, not less.
Marc Goldwein
Um, the truth is we can, we can look at isolated areas where productivity may go up or down. Older workers tend to be much more productive in some things because they have the experience behind them, less productive in others because, um, they’re, they’re not always as adaptable to new technologies and because of physical differences. But overall, this is something I think called the lump of labor, uh, fallacy. The idea, for example, we brought in a bunch of immigrants that there wouldn’t be enough jobs for Americans. I don’t think that’s true in general. It may be true in a specific moment in time if there, if it happens too quickly if there’s a big disruption in the economy.
Marc Goldwein
But we actually see in this economy is our labor force cl- has slowed so dramatically that having seniors work, you know, a few months longer, a month longer every two or three years, all that would do is slow the graith of slowing in our labor force, and I think that’s something we could easily handle and the economy would benefit from it.
John Donvan
Lump of labor is not a term that I have heard before, and I just wanna take a very quick sidetrack. Is it, is it the fallacy that all workers are the same and there’s just one big lump as opposed to differentiating their skills and sets an individual qualities and abilities?
Teresa Ghilarducci
Um, um, but it only refers to actually employment. It doesn’t refer to, um, the, the pay and working conditions.
John Donvan
I wanna welcome Jessica Hall to Open to Debate, and Jessica is a retirement reporter for Market Watch and has agreed to join the conversation and bring in some smart questions. So Jessica, thanks so much for joining us and come on in with your question.
John Donvan
So Jessica, can you back up to tell people what the cap is as it is, I think, maybe, maybe people are familiar with what it is, but it will be helpful for you to describe it.
Jessica Hall
From what my understanding is that it’s basically there’s a, a cap on the Social Security earnings and once you’re above that point, you don’t pay more into system, you, you max out of the system.
John Donvan
And so I think you’re asking the question, for, for people who are higher income, if they’re making $200,000, why not be taxing them on the $200,000 to support the system? So um, what, what about that question, Teresa?
Teresa Ghilarducci
Um, I don’t think there’s a much downside to raising the cap. It’s about time, um, given that the growth of earnings have really, uh, occurred over the cap. Um, and, um, we have 506 people, 506 people who already pay their Social Security tax by the time they go to New Year’s brunch. They get about $160,000 per day and they’re done, but the person who serves them brunch, um, or their maid has to pay the entire year. So as you’re raising the cap so that, uh, very high earners, um, um, pay longer, like we do for Medicare, um, would bring substantial amounts of income, um, to the system.
Teresa Ghilarducci
In terms of fairness, um, it would, it would be fair, and in terms of backlash, I think their backlash would be muted. They can afford it. One problem would be that they will not get a corresponding increase in benefits, maybe a little bit. In the Lar- in the Congressman Larsen’s bill, there’s a little bit of an increase in benefit, and they may politically not support the Social Security system as, as much as they do now, but it’s such a small part of the, of the, um, of the p- of the voting group that I think we can have enough support for, for Social Security without their, their buy-in. So I’m in favor of the, the four or five proposals in Congress to just lift the cap.
Marc Goldwein
I actually, I also support increasing the cap. I think it’s a useful way to progressively bring in coming to the program. It’s not a cost-free way. Uh, when you raise the cap, 12.4%, that’s a marginal tax increase. That’s going to reduce some people’s incentive to work. It’s gonna increase their incentive to reclassify income. And if we raise that cap at the top, you’ve basically put the top rate at something like 52%, in some states upwards of 60%. That’s gonna limit how much we can raise taxes for other really important purposes, whether it’s more investments or deficit reduction, which I support or, um, you know, investments in, in, in kids or social welfare.
Marc Goldwein
So it’s not a no brainer that that’s where you should put all the money. Most important but, but I support it, but most importantly, if we were to eliminate the cap, it would only close, depending on how we did it, half to two-thirds of the structural Social Security cap. And so we would still need more things on top of that to get to full solvency. And so I would support a plan that raises the cap and also raises the retirement age.
Teresa Ghilarducci
So I have another place to get, um, revenue with and not cut benefits, um, and that is to tax investment incomes. Um, a few years ago, Elon Musk earned or lived on $87 billion, um, per year. If he pays his Social Security tax, I’m not suggesting it, but if you pay, if you taxed all of that, that income, um, with the Social Security tax, 10 billion more dollars would have flowed into the system, um, which would have actually added quite a bit.
John Donvan
Jessica Hall, thanks so much for your question and for, and for bringing, bringing that part of the conversation to the table. I really, really appreciate it. Um, I wanna now bring in Mark Stein, who is editor for PBS Next Avenue, Money and Policy, Work and Purpose. Mark, thanks for joining us, and come on in with your question.
Mark Stein
I recently saw a Harris Poll taken earlier this year, which people said when they plan to quit working full-time, and I was absolutely gobsmacked by the numbers. Um, 25% of the 1300 people who were interviewed said they would plan to stop working before age 50, three-quarters before 65, um, which is exact opposite of what everybody expects. Does, does it surprise you that so many people still to this day think, “Oh, well, yeah, I’ll just knock off at 65.”
Teresa Ghilarducci
Um, we and other researchers have done a deep dive into the quality of jobs. Um, and so I’m not surprised at the desire, um, when, when you talk to a survey to leave those jobs. Jobs have gotten, um, a, a bit worse. Um, so we’re seeing a lot of, um, Marc called them social determinants of health, I just call them plain inequities in the kinds of jobs, um, and the kind of health effects of jobs.
Teresa Ghilarducci
So we’re seeing many people come to their retirement age at 62, um, really improving their health because they’re leaving insecure jobs that have what’s called, the researchers called a very, um, low reward to effort ratio. So I’m not surprised at all.
Marc Goldwein
Uh, yeah, I, I, I think survey data is always tough, uh, especially when you’re asking people about the future. What we see as it gets closer is that, um, people, a lot of that survey data does start to approach … If people get closer to the age, they do start to think they’re gonna retire at whatever the normal age is. Then as they hit 62, a lot of them pull back and end up taking the early age. And sometimes it’s for, um, really important reasons, as, as Teresa mentioned, they’re, they’re health isn’t there and they have this lifeline.
Marc Goldwein
Other times, the survey data is it’s kind of for, um, I don’t wanna say stupid, but it’s kinda for silly reasons, “My office hired this new guy and I don’t really like him,” um, or this isn’t silly, but it’s real, “My housing value went up $50,000 more than I thought it would,” which happened a lot over the course of the pandemic. And so what we see is these signals matter, but as it gets, um, as it gets closer to actual retirement age, uh, the cash matters more.
John Donvan
Mark Stein, thank you very much for, for joining us in Open to Debate and bringing your questions.
John Donvan
Uh, we’re gonna go to closing statements in a couple of moments, but I just wanted to first ask one question that I don’t think we’ve addressed, uh, where the two of you at the opening took opposite positions on whether working into your more senior years is good for you or bad for you. And I, I’m guessing the answer is more nuanced than I might have just phrased it because it might all depend on which, which seniors you’re talking about. Uh, Teresa, why don’t you take that first?
Teresa Ghilarducci
It really depends upon who you look at. When you talk to senators and professors and think tank directors, um, we love our jobs, and we, and we seem … Our occupations are such that we seem to get better at it, um, and we have all this crystallized knowledge. And we also control the pace and content of our work, and we tend to, based on the IRS literature, get paid for it. You can see that our income i- is going up.
Teresa Ghilarducci
So I don’t dispute that for some people, um, working longer, um, improves your relationship with your, with your partner and it also, um, gives you more money, more satisfaction and you get more and more status. But my point is that those numbers are very small, that the general experience for most American workers is that retiring with enough money to live on increases your wellbeing.
Marc Goldwein
Yeah, I, I agree it depends on who, but my reading of the data is, um, Teresa thinks the small part is large and the large part is, is small. Of course, some of these factors are easier to determine than others. Almost everybody is richer as a result of working longer. That’s almost by definition. True. Um, where I think is the, the intangible stuff but really important and you do see across income spectrum, even jobs that you don’t think of as very fun jobs, um, i- i- is on the social networks that are build and maintain just being around humans all the time, um, is, is really powerful for, for people, um, the mental sort of e- and physical exercise and acuity.
John Donvan
Okay. A- as in so many things, it sounds like the answer is it depends. Well, I wanna move to our closing remarks now. You each get to summarize your position very briefly. Um, Teresa, since Marc went first for our opening statements, you’ll have the floor on this. One more time, an answer to the question, should the government raise the retirement age, you are saying no, and one more time, please tell us why.
Teresa Ghilarducci
Raising the retirement age just cuts Social Security benefits, and if the intent is to make, um, people work longer, it’s really bad policy. Working longer is a fantasy for most people, even if they plan to. Most everyone is out of the labor market by age 67 and most, um, everybody is out of the labor market because, um, they were pushed out.
Teresa Ghilarducci
But we hear about some older workers. In the, in the spring, Betty Glover, a 91-year-old Oregon grocery store clerk could retire only after a dedicated GoFundMe campaign raised $80,000 for her. She couldn’t retire just on her Social Security benefits. And in February, elementary school teachers, I mean, sorry, elementary school children, children in Texas raised $250,000 for their 80-year-old school janitor so he could retire again after he was forced back to work because his rent increased by $400. His, uh, Social Security wasn’t enough.
Teresa Ghilarducci
Now, these stories about GoFundMe accounts, uh, might warm your heart, but they are not feel good stories. They illustrate a failed retirement system, um, that cutting Social Security benefits by raising the retirement age would only make worse. And work in old ages and all that great. My mother worked until she was 72, but her neck was severely arthritic. Her doctor had told her to quit, um, when she was 65. But after being laid off at 72, she enrolled in work programs for low income seniors, and she earned 1.65 per hour. She finally had about five years of retirement, uh, but her … She was plagued by the ar- arthritis has made, was made worse by her job.
Teresa Ghilarducci
When I was in school, um, in 1983, President Reagan and, and Congress cut benefits by raising the retirement age from 65 to 67. If those cuts hadn’t happened, Social Security benefits now would be 20%, um, higher and most people, um, who are poor now, uh, would have a fighting chance for not being poor.
Teresa Ghilarducci
We have plenty of ways to pay for Social Security. So cutting Social Security benefits by raising the retirement age would just doom American workers to depend on random act of kindness or GoFundMe pensions. Um, they would have less choice and they would have worse jobs, and we can do better than that.
John Donvan
Thank you, Teresa. Marc, you get the final say here your, your final pass at telling us why your answer is, yes, the government should raise the retirement age for the last time. The floor is yours.
Marc Goldwein
Look, raising the retirement age will help us prevent a devastating insolvency in just 10 years. It will promote stronger economic growth. It will leave seniors wealthier, healthier, happier. Um, and we can do it in a way that is so gradual, um, that it’s barely felt and with new protections and enhancements for those a- at the bottom and the vulnerable that really need it.
Marc Goldwein
But we need to think way beyond raising the retirement age. We need to rethink retirement in this country. The current way retirement works for most people is you do the same thing your whole life, it’s very binary, and then one day you just stop. That’s not how all human beings are. It’s not how most of us are. We need a flexible system that people can retire early and have financial security or they could do as my grandfather did and work till 82, um, because that’s what they enjoy doing.
Marc Goldwein
We need a system that can i- incentivize the development and creation of other forms of partial retirement, phased retirement, encore careers, uh, that allows people the opportunities for mentoring, consulting, teaching, that gives people these other kinds of, of choices, um, you know, additional part-time jobs. We need to mobilize volunteerism among seniors so that those that aren’t getting those social benefits from work, from responsibility, from, uh, you know, from practice are getting it in other ways.
Marc Goldwein
And we need to support intergenerational caretaking because being a grandma or grandpa is a job too. Raising the retirement age isn’t gonna fix most of these problems, right? We need a bigger system for that. But it’s a small meaningful step that can start to get our signals right and in the meantime, help us prevent what would be a devastating 23% across the board benefit cut just 10 years for now. And if you ask me, that’s worth fighting for.
John Donvan
Thank you very much, Marc, and that concludes our debate. And I wanna thank our debaters, Teresa and Marc, for bringing your thoughtful disagreements to the table and doing so with mutual respect. And even when there was a reflare up of acrimony the way that you settled it and sorted it out amicably and with class. In short, I, I really wanna thank you for the way you did this and for being, as we like to say here, open to debate.
John Donvan
I also wanna thank our reports, Jessica Hall and Mark Stein and Mark Miller, for your contributions. And for all of you listening, I wanna thank you for tuning in to this episode of Open to Debate. As a nonprofit, our work to combat extreme polarization through civil and respectful debate is generously funded by listeners like you and by the Rosenkranz Foundation and by supporters of Open to Debate. Open to Debate is also made possible by a generous grant from the Laura and Gary Lauder Venture Philanthropy Fund.
John Donvan
Robert Rosenkranz is our chairman, Clea Conner is CEO, Lia Matthow is our chief content officer, Julia Melfi is our senior producer. Marlette Sandoval is our editorial producer. Gabriella Mayer is our editorial and research manager. Gabrielle Iannucelli is our social media and digital platforms coordinator. Andrew Lipson is head of production. Max Fulton is our production coordinator. Damon Whittemore is our engineer. Raven Baker is our events and operations manager. Rachel Kemp is our chief of staff. Our theme music is by Alex Clement. And I’m your host, John Donvan. We’ll see you next time.
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