“What’s responsible for this major shift in Social Security, you ask? For one, it’s a combination of demographic factors, such as increased longevity, and the ongoing retirement of baby boomers, which is weighing down the worker-to-beneficiary ratio.”
– Sean Williams, Motley Fool via USA Today, 2018 1113
I’m not picking on Williams, Motley Fool, or USA Today here, because these facts are common knowledge reported in various forms throughout the news media. You can hardly come across any reference to the future of Social Security without encountering these bits of conventional wisdom. The problem is they’re wrong.
What? Everybody knows people are living longer, and that this is amping up the retiree to worker ratio. This demographic problem is causing SS to have to pay out more than it takes in and threatening the sustainability of the program. These facts are beyond dispute. Right?
No. Within this wording lies a framing choice that goes well beyond the hard facts. This is made clear by an alternative way of framing the facts to place the blame not on we the people, workers and retirees, but on a defect in the program itself.
The problem is not one of people living longer. We’re always looking for ways to live longer; actually succeeding at that is hardly a crisis, it’s cause for celebration. The problem is that while reality changes, the program remains static. The age to which we live goes up, but the age at which we become eligible for benefits does not.
Now really, which is the real problem? Living longer? Or a flaw in the law?
That it is the latter is obvious because once you remove that rigidity the problem vanishes.
The alternative is for people to start dying younger.
There is no reason why the worker-to-beneficiary ratio has to change. Just adjust the age of benefit eligibility so that the ratio remains constant. Doing it the other way around and holding the age constant while changing the worker-to-beneficiary ratio is a choice, not a law of nature.
It’s sure not a demographic problem.
Some may object that allowing the eligibility age to rise would be politically unfeasible. But that’s demonstrably false, too, because we’ve done it before. What was once a fixed age 65 parameter was changed in the 1980s to gradually rise to age 67 depending on birth year. If that adjustment process didn’t stop there there would be no funding shortfall. Therefore we can conclude that the problem is the cessation of the adjustment process.
And it’s not a natural problem; it’s purely man-made. More specifically, government-made. Only politicians could turn a wonderful thing like living longer into a crisis.
Of course there are other proposed “solutions”, including playing tricks with inflation adjustments, as if just burying the fact that you’re cutting benefits in statistical legerdemain isn’t going to cut living standards. Any technocrat pushing such trickery should be ashamed of himself. Another perennial favorite is “means testing”. As if that would be something new. Means testing is already being done via the tax code, which takes back some of the benefit from higher earners by subjecting it to income tax. If that’s not enough, tax it some more, but don’t pretend you’re not already doing means testing and slap on a whole new layer requiring beneficiaries to file another raft of income documentation with the Social Security Administration … with the requisite Paperwork Reduction Act Notice included.
It becomes even more obvious that these “solutions” aren’t really solutions at all when you consider that when longevity increases further you will have to “solve” the same problem all over again. Only indexing the eligibly age to longevity can lay claim to the title of solution.
Let the solution fit the problem. The problem is the choice to cease adjusting the age of eligibility for longevity. So the solution is to not cease. It’s a fundamental, inescapable reality. As long as the age at which people stop receiving benefits rises, the age at which they begin receiving benefits must rise as well, or the root of the problem remains to grow back over and again.
Amazing how simple solutions became once you accurately identify the problem.