Being 70 today isn't the same as being 70 back in 1940. Far fewer Americans do the kind of back-breaking physical labor that a majority used to. We have better nutrition, better medical care, better pre-natal care than we used to. We have over 100,000 centenarians in the US today, enough for 500 Willard Scotts. Any large law firm or university faculty has septagenerians still at the top of their game. There are lots of tough old birds still perfectly productive at what were once considered advanced ages. Milton Friedman is still going strong at 88.

We had to change the law to allow SS recipients who wanted to continue working to get benefits as well, simply because there were so many who want to continue working, at least part time. When I'm 85, I hope I can teach the occasional Calculus class at the local junior college or attend the occasional foreclosure auction.

Moving the retirement age up doesn't just make actuarial sense, it makes common sense.

The retirement age should always be older than the average life expectancy. That's how it was when SS was created and it's the only way to make such a Ponzi scheme work - kill off most of the claimants before the payout.

Bart,

That may be true in some respects, but don't
tell it to my 50 year old dad who has done back-breaking work all of his life. He puts more
wear and tear on his body in a year than the average yuppie puts in 10.

Retirement age is a very big issue for him. The
difference between 60,65 and 70 would be huge.

Aren't all forms of insurance then just a Ponzi scheme in your view? That's a tad harsh.

We could rate the retirement age based upon
an individualized life expectancy and line of
work. In other words, have a blue-collar and
a white collar retirement age.

JH,

As the number of those people as a percentage of society decreases, it becomes easier to identify them and enable them to retire earlier on disability. That is just another math question for the equation.

Bart,

That seems like something worth looking into.

Bart: Aren't all forms of insurance in this country voluntary and require full disclosure? Social Security is not an opt out system, so moving the age may make sense for private insurance, not so for a public system you are forced to pay into.

Plus, no politician will commit the political suicide of raising the age of retirement on someone who is 50. Most would agree that raising the age as someone enters the system is a little fairer (they know beforehand what is going on) but to raise it on someone who has paid in for a number of years will come across, and rightly so, as being very unjust, if not outrageously so. Not that the system, as it stands, is very just, simply because you have no choice.

Buttercup,

Car insurance is not voluntary if you own a car.

Social security reform, to me, is merely a part of an overall restructure of the tax system eliminating income taxes, corporate taxes, estate and gift taxes, FICA, etc and replacing them all with a National Retail Sales Tax. Then I would award everyone an identical social security payment, adjusted upwards for people who have paid more into the system. At age 70 Bill Gates and the cleaning woman in Microsoft would get the same amount of money, exceot that the additional funds Gates paid in prior to the change would be factored to give him a larger payment.

The raise in the retirement age is necessary as an actuarial matter, as there are now about 3 people paying for every recipient, as compared with 16 payers in 1938. Uruguay faced this issue in the 90s, and is still getting crushed. Chile privatized.

Bart -- Private insurance is a way of spreading the economic cost of catastrophic events across the population as a whole, so that everyone faces the same expected cost at a high probability, rather than the same expected cost with high variability and, at the extremes, low probability. Insurance exists because we are risk averse, and would rather pay $1000 per year for 20 years than run a one-in-a-million chance of paying $500,000.

Insurance breaks down in two circumstances. The first, not relevant here, is when the insured can increase or decrease his chances of collecting on the insurance. This is dealt with through rated premiums, regulation and investigation.

The second problem is when everyone starts facing the same expected cost with high probability. When that's the case -- prescription coverage for seniors and social security pop to mind -- you will never see private insurance without subsidy.

Social Security was not designed to be a retirement fund, but to insure that elderly or disabled Americans who could no longer work could still eat and have shelter. It turned into a pension fund somewhere along the way. The two functions need to be separated. One system should be created to be a mandatory self-financed retirement scheme. The other remains Social Security that is means tested.

The year that is implemented, we slowly begin changing traditional Social Security benefits from the old system to the new. The people who contributed to the system as it existed before get all the old benefits because that was the promise made to them and they structured their life accordingly. Everyone else gets a mix in benefits based on how long they worked under the old & new systems. When the last person who contributed to the old Social Security retires, everything becomes self-financing and the new Social Security is totally means tested.