It sounds like a simple fix to the nation’s immense problem of funding Social Security and Medicare for an aging country – just get everyone to work to 70 and the math works out a lot better.
But this idea, despite being embraced by a number of politicians, has a long way to go. It’s being challenged in academic circles as a new form of inequality. This one has been dubbed “longevity inequality.”
The argument made against a retirement age of 70 is that it’s not fair to people in the types of jobs that require brawn. Think of a 68-year-old climbing on top of a house to replace the roofing. Then compare that person with a 68-year-old tapping a computer keyboard.
In addition, people with college educations and desk jobs tend to live longer than those with low incomes. Here’s where the money inequality issue gets fierce. If the professional lives a lot longer than the roofer, after retiring at 70 the person who had the desk job could keep getting monthly Social Security checks for years longer than the roofer. So the argument is that a lot more Social Security will go to the affluent people than to those who met their demise at a much earlier point in life.
During the last few years, the issue of pushing the retirement age to 70 gained ground as researchers noted that people are living much longer than they once did. In 1915, a 65-year-old man could expect to live until age 79.7 on average. In 2015, it was 86.1 years. That’s 6.4 extra years of drawing Social Security benefits. For women, life expectancy has climbed from 83.7 years in 1915 to 88.7 in 2015.
But those are averages. Studies have shown life expectancy varies based on income, race, education and even the state or county where people reside. The General Accountability Office dug into the issue this spring with a report that showed great discrepancies in life expectancy between income groups.
Lower-income men approaching retirement live on average 3.6 to 12.7 fewer years than higher-income men, the GAO wrote in its report. And with those shorter life spans, the GAO noted, lower-income people would end up earning far less Social Security than the higher-income people because lower-income groups tend to live shorter than the national average for life expectancy.
Dying earlier ends up cutting a low-income person’s lifetime benefits by as much as 11 to 14 percent, said the GAO. Based simply on longevity, higher-income workers now get $70,000 more over a lifetime than low-income retirees, the GAO said.
Low-income people also depend more on Social Security than the affluent. Currently, monthly Social Security benefits on average equal about half of what lower-income people were making while working. Workers with relatively high career earnings received monthly checks that equal about 30 percent of what they earned while working.
When people retire earlier than the full retirement age, their monthly check is reduced. Despite the reduction, the most common age to retire in 2014 was 62. Full retirement age is now 66. So a person who would have received $1,000 at age 66 would get only $750 at age 62.
Many people retire early because they have little choice. They become ill or encounter layoffs or other problems at work. About 36 percent of current retirees retired earlier than they planned, according to research by Employee Benefit Research Institute.
Groups that want 70 to be the age for full retirement benefits would allow people to retire earlier, but doing so would reduce their monthly check. Neither Hillary Clinton nor Donald Trump have embraced the idea.
Currently the average person in the low-income group who was making $20,000 when working would get $156,000 over a lifetime in Social Security benefits after retiring at age 62 and living to 83, according to the GAO. A person in the high-income group who was making about $80,000 would get about $355,000 over a lifetime after retiring at 62 and living to 83.
But in the low-income group, living to 80 would be more likely. And that would mean receiving about $138,000 from Social Security after retiring at 62. The higher-income man would have a life expectancy of 86 and earn $411,000 from Social Security after retiring at 62.
The Center For Retirement Research at Boston College recently ranked the jobs that would be the most likely to require a person to retire prior to full retirement age: rock splitter in a quarry, floor sander, steelworker, commercial diver, truck driver and oil rigger.
White collar jobs where people tend to be the most able to continue working include: interior designer, lawyer, aerospace engineer, loan counselor and radio announcer.
Meanwhile, some professional jobs are also physically demanding and can become difficult with age, including surgeons and critical care nurses.