End the Life Expectancy 'Handouts' and Encourage Post-Retirement Work
In 1900, the average life expectancy at birth was 49.2 years. It's a good thing President William McKinley didn't sign on to a Social Security-type law back then. Instead of arguing about whether 70 is the new 65, as Michelle Malkin did in a recent column, we might still be in the middle of a century-old argument about whether 55 is the new 50.
Until the 1930s, how late into life people chose to work was their own business. What many don't fully appreciate is how determined President Franklin Delano Roosevelt and the early blue-collar unions were to make it their business instead. Operating under a silly assumption that older people continuing to work were denying new workforce entrants their chance at employment, the Retirement Earnings Test in early Social Security legislation prohibited everyone age 65 and over from getting a benefit in any month during which they engaged in "regular employment." Similarly, though their enforcement was spotty, early pension systems established by the United Auto Workers and others, even the 30-and-out arrangements enabling some UAW members to retire in their late-40s and early-50s, penalized workers on a dollar-for-dollar basis for any earnings from work after retirement.
In the ensuing decades, for better or worse, Social Security has morphed into a somewhat generous lifetime retirement entitlement. The system's current structure is unsustainable, but salvageable. Meanwhile, unconstrained by competitive market forces and insufficiently monitored by voters, many public-sector retirement plans turned into early-retirement gravy trains. Most of them are in similar or worse peril; we will find in the next several years that many can't be saved.
The politicians who created these systems have over a period of decades made promises they should have known could not possibly be kept. Why should they have known? Because they had every reason to anticipate that life expectancies would continue to increase.
This takes us to a critical point which, though inarguably true, may be difficult for some to handle.
Each year, as long as legislated or contractual retirement ages remain fixed while life expectancies quietly grow through improvements in safety, medicine, and manual labor-sparing technologies, the population as whole picks up a couple of tenths of a year of extended lifespan -- and, as long as the laws or contracts don't change, extended retirement. This represents a very real annual "handout." It certainly isn't earned; the only thing you have to do to pick up each year's additional gift is to remain here on planet earth. One could argue about intent -- was it sloth and inertia, or did the politicians realize that they would be creating an ever-growing number of beneficiaries? -- but no one can dispute the accuracy of my characterization.