I Turn Old Today

INSERT DESCRIPTIONDan and his wife in 1966.

Back to Bismarck!

Today I am officially old (by definition of the U.S. Census Bureau).

As an economist, I am “hung up” on this age. Why? Because the life-cycle theories of utility maximization that describe patterns of consumption are based on a retirement age; and 65 was enshrined as that age by the Social Security Act of 1935 (even though its predecessor, Bismarck’s legislation of 1889, set the pension age at 70).

The problem that has underlain Social Security and other countries’ public-pension programs is that the time from 65 to death has been rising very rapidly — five years for men, seven for women since 1938 in the U.S. — so that Social Security has been increasingly underfunded.

The U.S. has gone a bit of the way. Sixty-six is about to be the regular age for Social Security, and 67 will be in 2021.

But that is nowhere near enough, given rises in longevity. The solution is simple: raise the age of regular benefits by a year four separate times — once every five years from 2015 until 2030. That removes most of the Social Security deficit; and the average retiree could still expect to live at least as long — and draw benefits for at least as long — as Americans who retired at 65 when the program began.


Professor Hamermesh states the problem and its solution with simple elegance.

Blaming the Baby Boomer generation or any other generation is a futile exercise, like banging on the tray of one's high-chair.


Does this fix you mention take into account only increased longevity or will it also take into account the vast number of baby boomers getting to retirement age and the sparse number of people under retirement age to pay for it?

Just curious because it seems like such a simple fix for what has seemed like a monolithic and unsolvable problem.

the Gooch

Read Boomsday by Christopher Buckley.

He shows how the crisis can be solved.


Increasing flexibility is much preferable to a one size fits all retirement. Social Security isn't a lot, but it does replace 42% of earning in retirement, which actually ends up being something like 66% of retirement income. Anyone enjoying their work can always continue. What makes anyone think anyone will want to employ them at 70 though? Knowledge based work ability may well deteriorate faster than physical ability. Are we going to have to have government be the employer of last resort? If longevity just means working longer, how many will want this? How many like their work, or are able to find work they like? The real benefit of longer retirements is people have the option to do work they like, or not work. Without that option, more will be forced to work at what they don't like, or be forced to lower retirement when they can't find suitable work. Something like half drop out of the workforce before Social Security already.


Lee Hachadoorian

I saw the demographer Joseph Chamie (formerly with the UN, currently with Center for Migration Studies) at a conference in 2004. Given the aging population in many countries, he proposed a thought experiment where he asked, if benefits and tax rates don't change, so the only variable you can tweak is the retirement age, what would it have to be in 2030 (?, don't remember exact year) for the pension system to break even. For most European countries the answer was in the 70s. For China, everyone would have to work two more years after dying.


Happy Birthday, Dr. Hamermesh! As an LAH alum at UT, I really enjoyed your lectures and hope you have many more to give. Best wishes.


SS seems like such an evil [Fustian] system. A cruel challenge that society twinds fates and fortunes in a mired spirited [path].

We have all tied our

All of our fortunes and fates have been bound together in a life lottery. Of which half survives, a flip of a coin at any point with another and that is the system we are forced to share together.

SS must be paid into as a payroll tax, a system with few exceptions. For a retirement benefit that will be paid to 1 in 2. Payment in not received by many all on the twists of fate have nothing, others retirement reward.

We are forced into the promise of retirement.

I deserve a longer retirement.

We made a man walk on the moon.


I am fit and healthy and of sound mind except for my dedication to literature and the theatre. I would gladly work a reasonable number of hours per week at any honorable job, as I did in various Day Jobs from waitress to bus driver to teaching acting classes for kids and writing classes for college students throughout my wage-earning life. But my wage-earning life ended when I became noticeably younger than other job-seekers, and was rejected as "overqualified" when some prospective employer was kind enough to cite a reason. Straight out of college forty six years ago I made $10 an hour teaching "creative dramatics" classes after school and weekends, and I could live on that wage. Those programs are still paying college grads $10-$12 an hour to teach, though the price of a plain loaf of bread has gone up from 10 cents to $2.50! I can't even get an interview for one of those jobs: they want to pay that $12 to a BA or MFA straight out of college, not an old person with forty years of experience. And it is not just airy artist-types like me who are tossed on the scrap heap long before our productive years should be over. My family is full of engineers and IT people who have gone from well-paid jobs with benefits to temp contracts to-- nothing. The years between the last job with health insurance and the age of eligibility for Medicare are a nightmare. I'm not surprised that the suicide rate among 50-65 year old folks is rising rapidly.



This is a bad idea. As a society we work harder and raise the standard of living and life expectancy and the result is... working more? Why shouldn't we get a longer retirement? I deserve it. I have lived in moderation, and have taken care of my health, a longer retirement only seems fair.

Wouldn't reducing health care spending also fix social security?


There are some ethnic groups that life expectancy barely reaches the retirement age. Yes, Anglo-Americans are having long retirements. But some Americans are lucky to get a single Social Security check.

Matthew Speed (not Matt)

I am going to take this opportunity to pile on Matt as well:

First of all, SS was designed to kick in at the point when many would pass on. If it were being created today the age would be much higher. It should have been indexed to life expectancy from Day 1.

Second, it does not matter that some ethnic groups live longer than others, our legal system is supposed to be color and genetic history blind. Although this country has already long since deviated from its correct path, the day we see laws written that say "Ethnic group x has one set of rules and group y has another" we will know this great experiment in human freedom had the last nail hammered into its coffin.

Dave Brooks

Speaking as a boomer who will "lose" a year of retirement because of the first Social Security tweak - you are correct, the age should be raised and soon. I should "lose" several more years.

The 65 cutoff is arbitrary and should be changed as circumstances change.

Circumstances have changed.

leo davenport

Oh. boy getting old....http://www.comedysmack.com/date/2008/10/8/newsworthy-ish


This is the Freakonomics blog right? I can look at things "differently"

Wouldn't a reduction in life expenctacy ultimately result in the same end balance? I'm not saying to aggressively market pro-smoking campaigns, but there are certain things in place now that we don't know the long term effects of.

I recall earlier on in life that "cell phones cause brain cancer" (this was of course, before they became popular and "necessary" quelling any mention of that short of a short reminder in the movie Thank You For Smoking at the end). I know technology has come a long way since the days of the old giant phones, but we're also on them a LOT more now (I know 8 year olds who average 2 hours a day on their cells). Could there be long term health risks to this? And that's just one example.

Also if healthcare becomes totally privatized and less people buy medical insurance (due to incentives and budgets), that means they too could have a lower life expectancy. All kinds of ways to cut the end result!

Its hard (or impossible) to know. Once all the baby boomers are dead and gone (God rest their souls) we might be looking at an entirely differnet life expectancy in the upcoming generations. There might be an entire group of workers not making it to retirement, at which point we can start paying off debt. I mean, it sucks if I work until the day I die, but our children's children at least will get some benefits.



Congratulations Dr. Hamermesh! You're honestly my single favorite blogger on this site. Here's to 65 more!


This is a interesting article with an interesting solution to the Social Security debt issue. However, just because I am going to live longer (hopefully), doesn't mean I want to work at an 8 to 5 job longer. Unless laws are changed to allow me to tap retirement reserves to make up for the years the government does not follow through on it's promise to me should also be part of the idea. I believe we should eliminate early retirement payments at age 62. Why are people allowed to draw income at 62?


As a 43 year old white male engineer, I would be extremely happy to be able to continue to work as an engineer past age 70. Unfortunately, I doubt this will happen. Any medium or large size company will do their best to "downsize" an old white man over the age of 55. Engineering jobs are and will continue leaving the USA. There is not a shortage of engineers as some claim, there is simply a shortage of engineers willing to work to entry level pay.

I only hope that I will be healthy enough to stand 8 hours a day at the Wal-Mart front door and be a greeter when I am 64.


You might be old, but at least you haven't reached the big T!