June 20, 2018
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The Silver Tsunami

The protests in France and other European countries over government efforts to raise the retirement age are a preview of the clash of expectation and reality that will come here at home when the bulk of the 76 million American baby boomers begin drawing Social Security checks.

Expectations are high for Social Security. The program, created in 1935 by the Franklin Roosevelt administration in the midst of the Great Depression, was conceived as a way to end, or at least mitigate, elderly impoverishment. In 1935, the life expectancy in the U.S. was just 65, but those who outlived their ability to work often faced destitution or reliance on family. The obligation to care for the elderly was understood as a responsibility to be borne by society, part of the greater social contract.

The Social Security Administration’s website notes that American obligation to the elderly dates back to the English Poor Law of 1601, “the first systematic codification of English ideas about the responsibility of the state to provide for the welfare of its citizens.” Its principles followed to the American continent.

One of the first American proposals for retirement security came from War of Independence figure Thomas Paine. His Agrarian Justice pamphlet of 1795 called for “the establishment of a public system of economic security for the new nation whereby those inheriting property would pay a 10 percent inheritance tax to create a special fund out of which a one-time stipend of 15 pounds sterling would be paid to each citizen upon attaining age 21, to give them a start in life, and annual benefits of 10 pounds sterling to be paid to every person age 50 and older, to guard against poverty in old-age.”

Any effort to “fix” Social Security will be difficult, because of political concerns and the sheer size of the program. But a key misunderstanding must be clarified if an intelligent debate is to follow.

Social Security payments are not the same as contributions to a 401(k) account. The FICA withdrawal from your paycheck is not going to a personal savings account. Once paid, it is not our money. It is part of the contribution we make through our taxes toward the greater good, which includes providing for the common defense, law enforcement, roads and bridges and caring for others unable to care for themselves. Our nation is a better place for all because of that commitment.

If Social Security is seen in this context — to prevent or mitigate elderly poverty — then some fixes begin to suggest themselves. Social Security benefits might be eliminated for those of retirement age annually earning $250,000 per household and $200,000 per individual or more. Another, less palatable fix is to raise the age at which full benefits can be drawn. Those born after 1960, near the end of the boomer period, can’t collect full benefits until they reach 67. The demonstrations in France were precipitated by a plan to raise the pension eligibility age from 60 to 62.

The “silver tsunami,” when the bulk of boomers retire, is approaching. Informed decisions are needed.

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