Actually, The Retirement Age is Too High, by James K. Galbraith

Published on Wednesday, January 19, 2011 by Foreign Policy

The most dangerous conventional wisdom in the world today is the idea that with an older population, people must work longer and retire with less.

This idea is being used to rationalize cuts in old-age benefits in numerous advanced countries — most recently in France, and soon in the United States. The cuts are disguised as increases in the minimum retirement age or as increases in the age at which full pensions will be paid.

Such cuts have a perversely powerful logic: “We” are living longer. There are fewer workers to support each elderly person. Therefore “we” should work longer.

But in the first place, “we” are not living longer. Wealthier elderly are; the non-wealthy not so much. Raising the retirement age cuts benefits for those who can’t wait to retire and who often won’t live long. Meanwhile, richer people with soft jobs work on: For them, it’s an easy call.

Second, many workers retire because they can’t find jobs. They’re unemployed — or expect to become so. Extending the retirement age for them just means a longer job search, a futile waste of time and effort.

Third, we don’t need the workers. Productivity gains and cheap imports mean that we can and do enjoy far more farm and factory goods than our forebears, with much less effort. Only a small fraction of today’s workers make things. Our problem is finding worthwhile work for people
to do, not finding workers to produce the goods we consume.

In the United States, the financial crisis has left the country with 11 million fewer jobs than Americans need now. No matter how aggressive the policy, we are not going to find 11 million new jobs soon. So common sense suggests
we should make some decisions about who should have the first crack: older people, who have already worked three or four decades at hard jobs? Or younger people, many just out of school, with fresh skills and ambitions?

The answer is obvious. Older people who would like to retire and would do so if they could afford it should get some help. The right step is to reduce, not increase, the full-benefits retirement age. As a rough cut, why not
enact a three-year window during which the age for receiving full Social Security benefits would drop to 62 — providing a voluntary, one-time, grab-it-now bonus for leaving work? Let them go home! With a secure pension and
medical care, they will be happier. Young people who need work will be happier. And there will also be more jobs. With pension security, older people will consume services until the end of their lives. They will become, each and every one, an employer.

A proposal like this could transform a miserable jobs picture into a tolerable one, at a single stroke.

© 2011 Foreign Policy
James K. Galbraith teaches at UT-Austin and is the author
of The Predator State: How Conservatives Abandoned the
Free Market and Why Liberals Should Too.

4 thoughts on “Actually, The Retirement Age is Too High, by James K. Galbraith

  1. As with Dr. Russell’s essays, Galbraith’s piece was quite enlightening. Pointing out (what, in hindsight, seems so obvious), that with the current recession (serious recession) and with all of the outsourcing (de-industrializing the US), the economy, at this time, and for the forseeable future, simply has too many potential workers.

    His idea about a quasi-bonus social security program (to entice older workers out of the workforce in order to make room for younger workers to enter) is an interesting one. So too is the implication that with less work available (meaningful or otherwise), many older people would like to opt out — but those of a certain class, who, in turn, would be dependent upon the support, in taxes, of another class, who, in turn may not be so sympathetic or supportive …

    Again, this site is especially enlightening for me as I ponder these great social issues.

    I can’t wait to read more…

    1. One aspect of the Galbraith article that is radical is his statement that we don’t need a larger workforce. One would think that with technological advances the work week would decrease. But instead conventional economists are fixated on growing the Gross Domestic Product with more working hours. Galbraith makes the very sensible recommendation that we should instead concentrate in the production that is actually needed and spread it around.

  2. It’s stupid not to take SS at 62. If you need the money, you have to take it. If you don’t need the money, invest it. The break even point is around age 82 (compared to taking it at age 66). Are you going to live past 82? The average life expectancy for someone in the U.S. is 78 as someone has already mentioned. It’s a no-brainer. Take the money at 62.

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