Tuesday, March 2, 2010

Raise the Retirement Age?

Here Greg Mankiw opines that he hopes BHO and company will raise the retirement age. What nonsense from a smart guy.

How about people retire when they choose and are able to do so? Why would Mankiw or anyone else think that the President and Congress should be responsible for deciding when people retire?

The cracks and flaws that pervade the entitlement society are beginning to show in a big way in the EU. If you think what's going on in Greece and the rest of the EU right now is serious, just wait a few more years. America's problems with entitlement spending are just around the corner.

The very idea that a government can and should set a retirement age and then transfer income from current workers to retirees at that age is so riddled with flaws that the mind boggles. But the entitlement society does just that.

I did a calculation a few months ago that showed a startling fact. Had all the taxes I've paid in the form of Social Security "contributions" and Medicare "contributions" been invested in the S&P 500 portfolio, by the time I am 67, I would have had a portfolio that would have allowed me to draw $125,000 each year for 20 years. Instead, my Social Security benefit will be about $25,000 per year.

Raise the retirement age? That's just a red herring that diverts attention from the real problem.

4 comments:

Anonymous said...

The government does not tell people when to retire, but it does tell them when they are eligible for programs such as Social Security and Medicare. Are you opposed to raising the age of eligibility?

DLK said...

Am I opposed to raising the age? The retirement age for eligibility for Social Security will definitely have to be raised. Simple accounting arithmetic shows that.

But that's not the real issue, is it? What I am opposed to is compulsory income transfers. What I am opposed to is lying and stealing, which is exactly what Congress has done with Social Security.

Anonymous said...

DLK, you say, "The retirement age for eligibility for Social Security will definitely have to be raised." But that is exactly what Mankiw's post says, so where is the disagreement?

DLK said...

My intended point is evidently not clear. Yes, the eligibility age will have to be raised. But, raising the age won't solve the problem. That's my real point.

Raising the age is a short-term fix for a fundamentally flawed program.