One of the criticisms of raising the retirement age is the belief that older workers delaying retirement may "crowd out" younger workers and cause higher youth unemployment. This theory, also known as the "lump of labor theory," is challenged in a new paper by Alicia Munnell and April Wu of the Center for Retirement Research at Boston College.
Social Security trustee Charles Blahous has a interesting new commentary on the long-run sustainability of the Social Security program. The combined Social Security (OASDI) trust fund is due to be exhausted by 2033, but that measure, Blahous claims, gives the mistaken impression that we still have time to wait to make changes.
Seventy seven years ago today, the Social Security Act was signed into law. Over the life of the program, it has provided generations of Americans support and security once they reach retirement or if they are disabled. Unfortunately, no matter how you look at it, Social Security is now in dire need of reform. Every year, the Social Security Trustees warn us that changes need to be implemented as soon as possible in order to keep the program solvent.
The American Association of Retired Persons (AARP) hosted an event entitled "Work, Retirement Age, and Fiscal Sustainability in an Aging World." Two professionals in the field of pension public policy and fiscal sustainability led the discussion, providing an international perspective on the difficulty that population aging is posing for budgets across the world.
In our recent analysis of CBO's Long-Term Budget Outlook, we elaborated on how the overall federal debt is on an unsustainable path. Just twelve years from now, under CBO’s Alternative Fiscal Scenario (AFS), debt will surpass 100 percent of GDP, and by 2038, it will exceed 200 percent. Driving this debt growth are the increasing costs of Social Security and especially Medicare and Medicaid.
UPDATED: The table now also includes average scheduled benefits in 2050.
Brian Faler of Bloomberg has an article about the unwillingness of lawmakers to address Social Security's Disability Insurance program. Although the program's trust fund will run out in only four years (resulting in an automatic 20 percent benefit cut at that time), most people assume that money will simply be transferred from the old-age component of Social Security to fund the shortfall in the disability program.
Yesterday, Zeke Emanuel advanced an interesting proposal for Social Security and Medicare in a blog at The New York Times: varying the retirement ages for lifetime earnings. This policy is a response to a common criticism of raising the retirement ages that increases in life expectancy over time have been uneven across income groups. Emanuel's idea would work as follows: