Using data for 2009 from death certificates in all 50 states, the national Centers for Disease Control has concluded that we are living longer. A male infant’s projected life span has risen .2 years to 75.7 while a female infant’s life expectancy is up .1 years to 80.6. An interesting chart in the report notes projected longevity for ages 0-100. Females at age 100 are estimated as having 2.2 years left. 65-year old males have a projected life span of 82.3.
Living longer, though, means that Social Security will need more money unless changes are made. Proposals from the deficit commission appointed by President Obama include the following (pp. 48-53):
- Gradually increase the age that we start to receive Social Security benefits.
- Gradually increase Social Security taxes.
- Decrease what higher earners receive.
- Encourage more personal retirement saving.
The Economic Lesson
The future of Social Security takes us to two basic concerns.
- Life expectancy: When Social Security was created in 1935, the average lifespan was 64 and benefits could begin at age 65. Now, life expectancy can extend beyond 80.
- Ratio of workers to beneficiaries: Called pay-as-you-go, the Social Security system has current workers funding retirees’ benefits. Because of the baby boomers, the worker/retiree ratio is plunging. In 1950 there were 16 workers for every beneficiary and now it is 3:1. The projection for 2025 is a ratio of 2.3 workers for every retiree.