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  • A Short History of Social Security Retirement Ages

    This year, Social Security paid out more money than it took in for the first time since 1983. If the economy rebounds, Social Security is expected to be in the black by 2012 and will stay that way until 2015. But starting in 2016 Social Security will be in the red for as long as the Social Security Trustees can see. Under current law, Social Security is scheduled to pay out $7.7 trillion more in benefits over the next 75 years than it can afford to pay from its payroll taxes.

    Heritage Foundation retirement and economic policy expert David John has a new paper out making the case that one way to keep Social Security solvent is by raising the retirement age, which, as John ably details has been a moving target ever since Social Security was first created:

    Although “mid-sixties” is typically the age range defined as the beginning of retirement, history shows that until fairly recently, it was common for men to be employed after they reached 65. In 1880, 76 percent of men were employed at age 65, a proportion that declined to 43 percent in 1940, and 18 percent in 1990. Although the current recession has caused more workers to postpone retirement, a 2009 survey of retirees found that 84 percent had entered retirement at age 65 or earlier.

    When Social Security was established in 1935, state pension systems were split equally between those that determined 65 as the retirement age and those that determined 70 as the retirement age. The Commission on Economic Security, which designed the system under FDR, was swayed to adopt age 65, partly because the federal Railroad Retirement System, which was established in 1934, used 65, and partly because analyses at the time showed that 65 was actuarially feasible at low levels of taxation.

    Since the program’s inception, the retirement age has undergone only two modifications. The first was the addition of the early eligibility age (EEA) (under which recipients receive partial benefits), which was created for women in 1956 and for men in 1961. The modification for women was motivated by politeness rather than policy considerations: Wives were generally three years younger than their husbands, and a gracious Congress wanted to allow couples to retire at the same time. Men were later offered early retirement as a mechanism to cope with high unemployment by encouraging workers to leave the labor force.

    The second modification was the increase in the normal retirement age (NRA) from 65 to 67, which was implemented in the early 1980s because Social Security was nearing a point where it did not have the funds to print benefits checks. In 1982, Chairman of the House Ways and Means Subcommittee on Social Security Congressman J. J. Pickle (D–TX) first proposed phasing in an increase to age 68 over a period of 10 years beginning in 1990. Pickle’s proposal was panned at first by Speaker Tip O’Neill in what Time magazine then dubbed “one of the more egregious examples of partisanship.” The Reagan Administration had landed itself in hot water over reform proposals it introduced in 1981, and O’Neill was not inclined to let Democrats absorb any of the heat with a proposal that would reduce benefits. In 1983, when a reform package was signed into law, it was clear that some increase in the retirement age would have to be part of the compromise. The Senate initially passed an increase to age 66, but Pickle was able to push through an increase to 67 in conference committee. Even then, the increase was not scheduled to take effect until 2000, when an increase to 66 was phased in year by year in two-month increments. A further increase to 67 using the same phase-in will begin in 2017.

    Posted in Economics [slideshow_deploy]

    13 Responses to A Short History of Social Security Retirement Ages

    1. Pingback: Tweets that mention The Foundry: Conservative Policy News. -- Topsy.com

    2. George Colgrove, VA says:

      This article only attempts at justifying rising the retirement age as a means of saving social security. It does not address the elephant in the room.

      Social security – like it or leave it is not an inherently governmental function in a free republic. It is not the place of the federal government to employee hundreds of thousands of expensive and redundant federal workers to manage the most inefficient retirement investment firm on the planet at a tremendous cost to the taxpayers, born and unborn.

      As Social Security is currently implemented, if done anywhere else, would be called a ponzi scheme and the official would be thrown in jail.

      Wikipedia: “A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.”

      The difference between the private sector shysters and the federal government shysters is the private sector shyster eventually runs out of cash to disperse and are eventually caught. The pyramid scheme after a certain point cannot sustain itself. The federal government shysters just throw the shortcomings to generation yet to be born. Moreover, there is no one to investigate and shut down the self serving, criminal and corrupt element that is the federal government.

      Social security for most people is a means where people get something for nothing. Here is the story of the first recipient of social security: “The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92.” – Wikipedia.

      We should not be discussing retirement ages in the tiring debate on how to keep this sinking ship afloat. We need to get this form of retirement investment out of the hands of the federal government. We need to get what people paid in to the corrupt system together with a reasonable interest and create an Equivalent Long-term Investment Account (ELIA). The ELIA should be adjusted for amounts taken out. This account should be paid out first to current SS recipients then on down to new payers. The recipient of their cash would then invest the ELIA into a private sector retirement fund.

      There should be a SS payoff tax that we all pay to begin the process of eradicating this behemoth. Yes it is a bailout, but if done thoughtfully it can at least attempt to take care of the people the federal government has frauded over the last 70 years. Newcomwers will get shafted, but we are going to be anyway. In the end SS is going down one way or another if something is not done.

      We need not discuss retirement ages –as if that is another freedom we are ceding to the federal government. We should retire when we want to and we should have the reserves that we make to retire with. That choice should not be left up to useless bureaucrats. Every state has wealfare programs that can take care of the needy. This function need not be done by federal bureaucrats. The nation can save $100's of billions each year by eliminating this. Investment firms already are in place to take this function over. Lets get started.

      We need to discuss how to save peoples investments from the greedy DC federal culture. Mind you, all of this federal government is only making the greater DC area richer by the year at the cost of the rest of us. Americans lost 5% in their household incomes since 2001 while the greater DC area household incomes grew by 32%. More government means less prosperity for America. Working to eliminate the dept of health and humans services will go far in allowing people to prosper on their own without social security or any federal program.

    3. Richard, New Orleans says:

      Amen Brother!!

    4. John, Cincinnati says:

      It's not a Ponzi scheme, it's social insurance. Every industrialized country has it in some form or other. I thought that we conservatives had made our peace with it back in the 50s.

      Sorry, but the public will never support turning core retirement funds over to Wall Street. Can you imagine the aftermath of the '08 crisis if "the retirement plan formerly known as Social Security" had gone down with the rest of the market?

    5. Ben C. Ann Arbor, MI says:

      Great post George Colgrove, VA. President Bush proposed you idea of ELIA and got shot down big time. The outrage will be deafening when the system crumbles. The problem is that Dingell and Conyers will be gone (the last two representative in Congress who voted to use SS funds for other projects) when this happens. For me, all living Reperesenative that opened up SS funds for general use should be in jail. The unfunded liabilities in SS are beyond comprehension.

    6. Richard Burke, Arizo says:

      What is needed is reform. Social Security has been perverted to the point where, unlike Ida May Fuller, a lot of people are getting the benefit who never paid into the fund for the required amount of quarters, if at all. Here is a true local example. A retired army Command Sergeant Major receives his full Social Security benefit at age 65. His wife, who never paid into the fund at all, filed for and receives half of the amount he is paid. Mind you, I state she receives half the amount he is paid, but that is not subtracted from his benefit. He gets his full payment, and she gets half that amount on top of his and she contributed next to nothing. True story. This, along with all the other excuses Congress has used to make social security into a social welfare system is a big reason it is going broke..

    7. Mike Bochert, Minnea says:

      We should decide what the objective of SS is, then we can discuss how to protect, or tweak, or ensure its solvency. If it is a welfare program for poor seniors, why does every senior get money? If it is a "pension fund" kind of program, why isthe amount of a worker's payroll taxes not even considered in the benefit calculation formula?

      If it is a "promise made by generations of Americans", why do I not remember either making or receiving such a promise? More importantly, why is the only constant over the decades of the program's existence the Federal Government taking increasing amounts of money from those who work and giving increasing amounts of benefits to all those who have reached a certain age. Every other aspect of the program has changed in one way or another.

      The program should be fundamentally restructured (or replaced) based on a very focussed definition of what it is supposed to accomplish.

    8. George Colgrove, VA says:

      John, Cincinnati, I for one would love to see this hande over to the private sector where I HAVE control over it not Wall Street or the corrupt federal government – who lately seemed to be one in the same. One thing about your comment about every industrialized country have something like it. They are all going bankrupt – just like us.

      It is not working – government does not work! Time to try something that does work – people fending for themselves. Investing and earning interest.

    9. Jim says:

      Social Security should be cut by 10%. To do this we need to go back to the books and use SS for what it was suppose to do and that was to supplement retirement, not to give it way.

    10. Jeanne Stotler,Woodb says:

      When a wife's benefits were calculated most wives were stay at home mothers, today's retiress are both male and female. I am 78 and there is not one woman I know who has not worked at sometime or another, most women worked during WWII as there were no men left at home, so to speak. My generation came along during WWII we helped our mothers can veggies, weeded gardens and baby sat , then we went on to become Nurses and teachers until someone in my generation said we could do other jobs, we did during the war why not now. Economy dictated that two salaries were needed so when kids were in school Mom worked. I was widowed young and I worked hard to support my family and I will apologize to no one for collecting Soc. SEc., I started paying in at age 14 when I worked in a dime store, I worked in restuarants, as a receptionist, a file clerk and as a dist. mgr. for a newspaper before my husband died, I since went back to school and as a nurse I worked until I broke my back now I collect MY SS. By the way if you are a widow you can collect on your husbands OR your own which ever is the highest, I collect on my own. An Insurance man once took my husbands acct. as to what he paid in over his lifetime, starting from age 15 and IF this was an annuity he would have collected his SS payment and NEVER touched the principal, we've been had by our own gov't.

    11. Leon Lundquist, Dura says:

      I see another legal issue with Social Security. It is no longer Insurance, it got shifted to Private Federal Payments to Individuals by Government, which in years gone by was the very definition of Corruption. When the SSI Fund raiders took the Retirement funds and started paying people who never paid into the Fund, it became a Redistribution Of Wealth and a Welfare Program. So their kids, their inlaws, disabled people all got a chunk of what was designed as a Retirement Fund. There are some people who are simple minded who have received Private Payments from a 'Retirement' fund. It became an everything fund for everybody.

      It is wrong at this point to raise the Retirement Age when the other leaks in the seive haven't been plugged. We paid Insurance premiums (with more valuable money) and we get paid back with two cent dollars! Now, the Fed is going to gradually reduce the value of the Dollar and that is coming out of the Baby Boomer's lifetime earnings and going to the Plutocrats. When they took my money and set up my benefits an apartment cost $150 a month, cigarettes were ten cents a pack and gasoline was thirteen cents a gallon. Do the math! They already stole my Capital all my life long! Now you want to steal my Retirement?

      The same game goes on with the Unemployment Fund! They keep expanding the payoffs without curing the actuarials, it is simple theft! The Demolition Plutocrats are destroying our Safety Nets! They are destroying the Unemployment Fund so it won't be around when we need it, the money will be gone. Twenty six weeks, that's all I ever got? Is it equal justice for people to get Two Years of Unemployment? It is just incentivizing continuing poverty, and it is Federal Private Payments to individuals and arguably Pay Offs to get votes. "Free Obama money everybody!" Lets all get some!

      Social Security is poverty, Unemployment is poverty and Welfare is poverty. All of it is guarantied pernicious and perpetual poverty for Americans. So, it doesn't really help the Unemployed very much. It isn't enough help to be helpful. It is just enough help to corrupt Americans and not a penny more. Progressives want widespread poverty so Americans can be exploited by Communists. Proof is they never, ever solved poverty. I say they never wanted to.

    12. Bobbie says:

      The government made a contract with the people. The government named it "social security." The government should cut everywhere that's needed to fulfill the contract of those who are truly entitled. Those that paid in. Private accounts can be created for those of us who are paying in now.

    13. Edward MacIsaac, San says:

      This whole "Problem" could be resolved by raising the due date for the 1st benefit check to age 140. 87)

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