Krugman: The Life Expectancy Zombie

[ProSense]

The Life Expectancy Zombie

So, one of the moments in my debate with JoScar — which wasn’t as bad as I felt, but should have gone much better — was my “wow” when JS raised the old line that life expectancy was 62 when Social Security started, so the program was no big deal.

Well, that’s still a “wow” thing: it’s incredible that people are still making that argument; when someone says something like that, he’s just proved himself ignorant, disingenuous, or both.

Let me just turn this over to the Social Security administration’s post on the issue:

If we look at life expectancy statistics from the 1930s we might come to the conclusion that the Social Security program was designed in such a way that people would work for many years paying in taxes, but would not live long enough to collect benefits. Life expectancy at birth in 1930 was indeed only 58 for men and 62 for women, and the retirement age was 65. But life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and someone who died as a child would never have worked and paid into Social Security. A more appropriate measure is probably life expectancy after attainment of adulthood.

As Table 1 shows, the majority of Americans who made it to adulthood could expect to live to 65, and those who did live to 65 could look forward to collecting benefits for many years into the future. So we can observe that for men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).

Also, it should be noted that there were already 7.8 million Americans age 65 or older in 1935 (cf. Table 2), so there was a large and growing population of people who could receive Social Security. Indeed, the actuarial estimates used by the Committee on Economic Security (CES) in designing the Social Security program projected that there would be 8.3 million Americans age 65 or older by 1940 (when monthly benefits started). So Social Security was not designed in such a way that few people would collect the benefits.

- more -

http://krugman.blogs.nytimes.com/2013/03/05/the-life-expectancy-zombie/

[madville]

1. Rates and caps have always been adjusted

Based on factors such as this, it's a fluid thing. It started out with a 2% total contribution rate and a $3,000 annual income cap.

We are at 12.4% and a $113,700 now. Both will have to increase over time to keep the program solvent. I don't think the political will is out there to raise the eligibility age though.