Menus Subscribe Search

Actuaries Insist We’ve Got to Retire Later

• September 22, 2010 • 2:21 PM

Early retirement, bah! The people who measure our life spans say Social Security should be less something that kicks in at 65 and more something Americans tap for, say, their last 20 years.

Mention fixing Social Security — projected by various accounts to be insolvent within a decade or three — and politicians of all stripes begin to lose their cool. George W. Bush’s domestic agenda in his second term was largely undone by an aborted attempt to partially privatize the program. Election-year officials regularly trade barbs over who cares less about protecting our grandmothers. Former House Majority Leader Dick Armey just this week called the program a Ponzi scheme.

The quagmire calls out for some eminently sensible — boring, even — pragmatists. Into this void steps the least sexy association in town, the American Academy of Actuaries. The group has been quietly, methodically advocating for one solution central to any suite of reforms: We must raise the retirement age. And they should know, right?

“People are living longer, in short,” said Frank Todisco, the academy’s senior pension fellow. “When people live longer and you have a fixed retirement age, it means a program like Social Security is going to get more and more expensive.”

Actuarially speaking, a 65-year-old man in 1940 was expected to live on average for another 11.9 years into retirement. Come 2035, that same 65-year-old man can look forward to another 19 years of life (for his lucky wife: 21.1 years).

When actuaries talk in this context about increased longevity, they aren’t looking at trends in life expectancy at birth. Those statistics have changed dramatically over the last several generations due largely to improvements in the infant mortality rate. The stat more relevant to Social Security, Todisco says, is how much longer you’re expected to live once you reach retirement age.
[class name="dont_print_this"]

Idea Lobby

THE IDEA LOBBY
Miller-McCune's Washington correspondent Emily Badger follows the ideas informing, explaining and influencing government, from the local think tank circuit to academic research that shapes D.C. policy from afar.

[/class]
That number has been expanding thanks to advances in medical technology and health care, particularly for elderly ailments like cardiovascular disease. Some critics cast the suggestion that people should therefore work longer and wait another few years until Social Security kicks in as a cut in benefits. But Todisco frames it differently.

“If you keep the retirement age the way it is, that’s equivalent to an automatic expansion of the system, because as people live longer, they’ll collect more and more in lifetime benefits,” he said. “Increasing the retirement age is a way of stemming that automatic expansion of the system.”

At play is how we define Social Security’s goals: Should the program ensure security for a set period of our final years (counting backward from the end of life expectancy), or ensure security for the expanding remainder of our lives (going forward from an arbitrary age like 67)?

When Social Security was created in 1935, no mechanism was built into the program to periodically adjust for changes in longevity. Through separate amendments, the retirement age has been adjusted once, in 1983, from 65 to 67. That change is being slowly phased in over time — as Todisco says we should also do with any new adjustments — and won’t be fully in place until 2027 (when the cohort born in 1960 reaches retirement age).

Ideally, Todisco says, raising the retirement age would signal to people that they should also work longer (we don’t want 68-year-olds sitting around with neither paycheck nor pension). But he’s aware of the counterarguments to this logic: Physically demanding jobs are harder to do as a person gets older, and older workers have a tougher time finding employment. And those improvements in life expectancy that actuaries cite have not been evenly distributed across socioeconomic groups, so that an increase in the retirement age would unfairly penalize segments of the population not expected to live to their late 80s.

“Those are all really important and legitimate concerns, but addressing them by holding down the Social Security retirement age for everybody is a very, very expensive way to address those concerns,” Todisco said. “It would be more cost-effective to address them outside the Social Security program through other public policies.”

The AAA doesn’t spell out exactly what those policies should look like or even what age we ought to set for retirement, but the idea needs to be part of any reform, the group has concluded. And maybe in saying so they can create a little political cover. Imagine hot-headed politicians falling back on this boring but convincing slogan: The actuaries say we have to!

“That’s not our objective, to give anybody cover,” Todisco said. “But obviously, the whole idea of appointing a commission politically is to try to make it easier to get something done and enact some decisions.”

Subscribe to Miller-McCune

Emily Badger
Emily Badger is a freelance writer living in the Washington, D.C. area who has contributed to The New York Times, International Herald Tribune and The Christian Science Monitor. She previously covered college sports for the Orlando Sentinel and lived and reported in France.

More From Emily Badger

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

September 17 • 4:00 PM

Why Gun Control Groups Have Moved Away From an Assault Weapons Ban

A decade after the ban expired, gun control groups say that focusing on other policies will save more American lives.


September 17 • 2:00 PM

Can You Make Two People Like Each Other Just By Telling Them That They Should?

OKCupid manipulates user data in an attempt to find out.


September 17 • 12:00 PM

Understanding ISIL Messaging Through Behavioral Science

By generating propaganda that taps into individuals’ emotional and cognitive states, ISIL is better able motivate people to join their jihad.


September 17 • 10:00 AM

Pulling Punches: Why Sports Leagues Treat Most Offenders With Leniency

There’s a psychological explanation for the weak punishment given to Ray Rice before a video surfaced that made a re-evaluation unavoidable.


September 17 • 9:44 AM

No Innovation Without Migration: Portlandia Is Dying

Build an emerald city. Attract the best and brightest with glorious amenities. They will come and do nothing.



September 17 • 8:00 AM

Why Don’t We Have Pay Toilets in America?

Forty years ago, thanks to an organization founded by four high school friends, human rights beat out the free market—and now we can all pee for free.


September 17 • 6:32 AM

Do Conspiracy Theorists Feed on Unsuspecting Internet Trolls?

Not literally, but debunkers and satirists do fuel conspiracy theorists’ appetites.


September 17 • 6:00 AM

The Grateful Dig: An Archaeologist Excavates a Tie-Dyed Modern Stereotype

What California’s senior state archaeologist discovered in the ruins of a hippie commune.


September 17 • 4:00 AM

The Strong Symbolic Power of Emptying Pockets

Researchers find the symbolic act of emptying a receptacle can impact our behavior, and not for the better.


September 16 • 4:00 PM

Why Is LiveJournal Helping Russia Block a Prominent Critic of Vladimir Putin?

The U.S. blogging company is showing an error message to users inside Russia who try to read the blog of Alexei Navalny, a prominent politician and critic of the Russian government.


September 16 • 2:00 PM

Man Up, Ladies! … But Not Too Much

Too often, women are asked to display masculine traits in order to be successful in the workplace.



September 16 • 12:00 PM

What Makes You So Smart, Brilliant 12-Year-Old?

Charles Wang is going to rule the world.


September 16 • 10:09 AM

No Innovation Without Migration: The Harlem Renaissance

The Harlem Renaissance wasn’t a place, but an era of migration. It would have happened even without New York City.


September 16 • 10:00 AM

A Law Professor Walks Into a Creative Writing Workshop

One academic makes the case for learning how to write.



September 16 • 7:23 AM

Does Not Checking Your Buddy’s Facebook Updates Make You a Bad Friend?

An etiquette expert, a social scientist, and an old pal of mine ponder the ever-shifting rules of friendship.



September 16 • 6:12 AM

3-D Movies Aren’t That Special

Psychologists find that 3-D doesn’t have any extra emotional impact.


September 16 • 6:00 AM

What Color Is Your Pygmy Goat?

The fierce battle over genetic purity, writ small. Very small.



September 15 • 4:00 PM

The Average Prisoner Is Visited Only Twice While Incarcerated

And black prisoners receive even fewer visitors.


September 15 • 2:00 PM

Gambling With America’s Health

The public health costs of legal gambling.


September 15 • 12:23 PM

The Scent of a Conservative

We are attracted to the body odor of others with similar political beliefs, according to new research.


Follow us


Do Conspiracy Theorists Feed on Unsuspecting Internet Trolls?

Not literally, but debunkers and satirists do fuel conspiracy theorists' appetites.

3-D Movies Aren’t That Special

Psychologists find that 3-D doesn't have any extra emotional impact.

To Protect Against Meltdowns, Banks Must Map Financial Interconnections

A new model suggests looking beyond balance sheets, studying the network of investment as well.

Big Government, Happy Citizens?

You may like to talk about how much happier you'd be if the government didn't interfere with your life, but that's not what the research shows.

Give Yourself a Present for the Future

Psychologists discover that we underestimate the value of looking back.

The Big One

One in three drivers in Brooklyn's Park Slope—at certain times of day—is just looking for parking. The same goes for drivers in Manhattan's SoHo. September/October 2014 new-big-one-3

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.