Without going into the pros and cons of raising the retirement age, I would like to take a shot at a couple of misconceptions that enter the debate.
First, an easy one. Headlines like these:
Uh, raising the retirement age is a cut in benefits. If Social Security benefits don’t start until 70, instead of 67, pensioners will get less than they would have. The piker who dies at 68 realizes a 100% cut.
Second, some favor increasing the retirement age because Americans live longer than they did. The counter-argument is fairly sophisticated, as it maintains the increase in average age is the result of lower infant mortality. With fewer persons dying before their first birthday, the average age increases. The average time spent in retirement has not changed, or so the argument goes.
Well that just ain’t true. Americans who reach age 65 enjoy a longer life expectancy than they did. The chart below comes from the Organization for Economic Cooperation and Development (OECD). (Click on it to enlarge.)
In 1962, the average man turning 65 was likely to live another 12.9 years. His 2005 counterpart could expect another 17.1 years, an improvement of 4.2 years. For women, the comparable numbers are 16.0 years and 19.8, an improvement of 3.8 years.