In case you missed it last week, America’s CEOs want to change the social security eligibility age from 65 to 70. Of course this isn’t shocking and this argument has been building for decades as a possible solution to the social security funding problem as so many baby boomers start to collect. From Bloomberg:
Raising the Medicare age to 70, from today’s 65, would keep the oldest workers, who generally have the greatest health costs, on private insurance for an additional five years. The shift would hit states that cover more low-income seniors through Medicaid, and it would raise premiums for younger people who buy health insurance through state exchanges, as more people with higher health costs enter the risk pool.
This would save Medicare money—a good thing for taxpayers. But it would effectively increase health costs for the country overall, including employers. “For many seniors, their costs will go up. For employers in the aggregate, their costs will go up,” says Juliette Cubanski, associate director for Medicare policy at the nonprofit Kaiser Family Foundation. That’s because Medicare pays doctors less for their services than private insurers do…
Workers might not relish spending those extra years on the job to keep their health insurance. But it’s the cost of living longer, as Gary Loveman, Business Roundtable member and chief executive officer of Caesars Entertainment (CZR), illustrated with a personal anecdote at a press conference:
“My father, who was an employee of AT&T (T) for more than 40 years, retired at age 61 and lived to be 95. He was a 34-year recipient of Social Security benefits—something that near his death, he noted to me with great pride that he had been on both [AT&T’s] payroll and the federal government’s payroll for much longer than anyone could possibly have anticipated. That’s, of course, generally speaking, good news,” Loveman said. “But it’s a problem the country simply can’t afford over a sustained period of time.”
I’ve witnessed this personally. I have a grandparent who spent 30 years with good old General Motors – retired at the ripe old age of 51 and collected pension and eventually social security benefits for more years than they actually paid into the system. That is why our ‘traditional’ way of retirement in America is broke. The system was not created to have people collect social security for 15-20-25+ years. When it was created, social security was a plan that the founders probably figured individuals would be on for 10 years or less. While I don’t want to have to work until I’m 70 – for me and most Americans this is a foregone conclusion.
The new reality we face is 70 years old today, is not 70 years old of 20-30 years ago. My Dad turned 70 this past year and still works in professional job and really doesn’t want to retire. He’s reached a point in his career where he knows just about everything in his business and he has 30+ years of great relationships to leverage, and he has no fear about getting ‘fired’ – he’s 70! Work can now be fun.
I have friends who still talk about wanting to retire at 55 and I tend to just shake my head and let them have their dream. They really have no idea the amount of money it will take to live from 55 to 90 or so. You’re talking millions of dollars in retirement investments – not 1 million – multiple millions to live another 30+ years. I’m realistic. I figure I’ll get to retire the day after I die. At least I hope I get to.