Life Expectancy Declines and Social Security Solvency…Is There a Connection? - nj.com
The Centers for Disease Control and Prevention (CDC) reports on their website that life expectancy for the U.S. population in 2020 was 77.0 years, a drop of 1.8 years from the previous year. This raises somewhat of a question regarding the potential for such a decrease affecting–favorably–the projections for Social Security’s solvency crisis, where fully-paid benefits are projected to cease in little more than a decade. Will it make a difference? NJMoneyHelp.com’s Karin Price Mueller deals with a variation of this question in a post on nj.com, and her answer is somewhat inconclusive since, as she points out, it’s a complicated matter. Read her post here…
The complexity in what would appear to many to be a relatively simple question lies in the history behind retirement ages built into the Social Security System. As Ms. Mueller’s article notes, the original age 65 retirement age presented a scenario wherein most retirees didn’t make it that far in life. Those who’ve followed the looming solvency crisis are well aware that as life expectancy evolved over time, lawmakers took steps to move it farther out, first to age 66, and then to age 67 for those born in 1960 or later. And while it might seem obvious that a declining life expectancy would serve to mitigate at least a portion of the solvency issue, there are competing factors, namely the pandemic-driven rush to retirement caused by folks dropping out of the workforce. Until we see updated life expectancy rates from the CDC, it really is difficult to project how much mitigation has taken place.
Ms. Mueller’s article goes on to explore several other aspects of the solvency issue and the potential “fixes” under consideration, some of which coincide with the Social Security Guarantee proposal developed by the Association of Mature American Citizens (AMAC) and currently being promoted by AMAC Action, AMAC’s advocacy organization. Click here to review this proposed legislative framework.
What’s with the obfuscation? The nj.com article headlined the question, then did not address it AT ALL! Neither does this. At least some readers are NOT STUPID. We know there are many factors affecting SS solvency. We know much about the history of SS – which by the way is NOT RELEVANT to the question of how will the decline in life expectancy affect SS solvency. WTF – why do you not want to address this question AT ALL? Must be an agenda, obviously, and a desire to NOT answer truthfully. Obviously it will help, the question is how much, which you’d think would be a legitimate question that could be addressed, not ignored.
Thank you for your observation. We agree (and said so in our post) that the referenced article was inconclusive about whether currently declining life expectancy will affect Social Security solvency. However you may wish to reconsider the relevance of Social Security’s history. When enacted in 1935, SS recipients were expected to collect benefits for only a few years, but continually increasing life expectancy has resulted in many (perhaps most) recipients now collecting benefits for decades, thus exacerbating the program’s solvency issue. AMAC has been aware of, and has lobbied for, sensible program reform for many years because it was evident the combination of increased life expectancy and declining ratio of workers to beneficiaries would eventually deplete the Trust Fund reserves. How the CDC’s most recent report about a temporarily declining life expectancy will affect Social Security’s current solvency issue is, in fact, still unknown and probably will remain so for years. But the basic issue – that increased life expectancy contributes greatly to the solvency issue – is the same. Even if the pandemic has resulted in a temporary lull in increases to life expectancy, the basic problem is the same – people are living much longer now than they did when benefits were first paid in 1940, and any solution which Congress ultimately enacts will need to address that issue. Raising the full retirement age for future beneficiaries would logically be included in such reform.
Remember too that each year the Trustees of Social Security perform a very deep analysis of Social Security’s financial condition and include the most recently available data (including projected life expectancies) in that analysis. We’ll be posting that report on our website as soon as it is published (scheduled for April of each year).
The AMAC Foundation website at which you read this post serves to inform our readers of newsworthy events and articles related to the subject of Social Security, Medicare, and retirement. The site isn’t intended as a policy-setting entity, but we do regularly report news about Congressional policy being considered. There was certainly no “obfuscation” intended by the referenced post – only a desire to provide information to our readers. We do, in fact, wish that Congress would address the solvency issue as soon as possible, including the role life expectancy plays in it, and we regularly say so in our posts at SocialSecurityReport.org. But direct contact with Congress, including promotion of a proposed solution, is done by AMAC’s legislative and political action organization (“AMAC Action”) as explained the referenced post. In any case, rest assured that here at The AMAC Foundation we appreciate and welcome your observations, and encourage you to comment as frequently as you like.
Russell Gloor
National Social Security Advisor
The AMAC Foundation