"The funny thing about retirement: Nobody was ever actually supposed to retire."

In 2014, Young People Will Be One Year Closer to Never Being Able to Retire

The funny thing about retirement: Nobody was ever actually supposed to retire. Let's take the United States as an example. While the Social Security Administration will tell you that the 1935 decision to set the retirement age at 65 was based on the pension systems already in place at that time -- half of which had 65 as their retirement age, and half of which used 70 -- it fails to mention that Americans' life expectancy was a paltry 61.7 years at that time. It's almost as if the pension industry asked cold-blooded actuaries to design highly promising, Ponzi-scheme-like retirement programs that would only benefit a fraction of the people paying into them. Almost.

But then, wham!, bam!, penicillin became widely available, and by 1950, life expectancy had jumped to 68.2 years -- comfortably beyond the retirement cutoff. In 1952, Jonas Salk introduced a polio vaccine, the 60s saw vaccines for measles and mumps, and in 1967 the first heart transplant was performed. Americans began living healthier and longer lives. Increasingly spry older people were no longer reminiscent of the sad old horse that (spoiler alert!) gets shipped off to a glue factory at the end of Animal Farm.

Stupid penicillin.

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15 Responses:

    • ben says:

      Came to the comments to point out the same thing - child mortality skews the mean ruthlessly. If there's two statistical literacy issues that drive me nuts, it's average lifespan and casual mixing of deficit vs. debt.

      • meh says:

        This. A hundred times this. The citation is really poor demography, and is honestly inexcusable. This stuff has been known for a really long time.

        The life expectancy figures given are from age 0. You need to look at life expectancy from the first year of work (18?) and expectancy from age 65 to have realistic actuarial numbers.

        The SSA actually posts some of this, and I think you can find more complete life tables it if you dig around the Census web site. See http://www.ssa.gov/oact/NOTES/as120/LifeTables_Body.html

        • Leonardo Herrera says:

          Stats nerds should come with the actual numbers or return their badges.

  1. John says:

    Bookmarking to come back to later if I ever start feeling ok about the way my life is going.

  2. Owen W. says:

    Oh look, it's another article that doesn't realize that the increase in life expectancy was mostly due to reduced childhood mortality.

  3. NelC says:

    Penicillin (and the rest of the medical advances of the twentieth century) did more, demographically, than advance life-expectancy, though. Before, your cohort tended to die off at a somewhat constant rate, so that every year there would be fewer of you around; life-expectancy was an average with a large standard deviation.

    Now, most of your cohort avoid dying from childhood to late middle-age and beyond; then, general wear-and-tear tends to cause breakdowns in the meat-machine, and your cohort starts dying off more randomly.

    So before, pensions were like a tontine, with a certain percentage at 65–70 getting the payout that all had contributed to, and continuing to die off steadily after retirement, with progressively fewer lasting to their seventies, eighties, and nineties. It wasn't as though everyone got to 65, and then fell over, dead, before drawing their pension. A significant number did live that long, and those that lasted longer got progressively weaker and needed looking after. It wasn't a cheat on everybody, any more than insurance is (necessarily) a cheat.

    Now, nearly everyone gets to survive until 65, and most can expect to be mentally and physically competent until their mid-seventies at least, which is when the Great Leveller starts seriously wielding his scythe driving his combine harvester of souls through our ranks.

    Medical advances did up our life expectancy, so the retirement age needs to be raised in order for pensions to work at all. But it can't work the same way because we're not dying off in the same way.

    Against this is the change in expectations. We know we're going to live to the arbitrary retirement date, and that with wise investment, we can enjoy an active life after, and many of us aim to retire before mandatory retirement, so that we don't have to work for the pissant petty tyrants who are busy earning money for their retirements, by buying our time and binding our living souls to an increasingly nasty work-ethic with the promise of a paradisiacal time to come.

    Fuck that. I'll retire when I want to, thanks. And take breaks and enjoy this life, and swap jobs as individual pissants get too much for me. It's not as though I can reasonably expect any pension fund, private or government, to actually survive untouched until I'm 66, let alone 90 or more, anyway.

    • Pavel Lishin says:

      Unrelated to this (haven't even read your comment yet), but I just got here by closing a tab on Stross's blog where I saw another comment of yours. Tiny, tiny internet world.

  4. Nathan Roberts says:

    Remember: Retirement isn't something you earn because you've worked all your life. It's something your owners grudgingly give you because you can't work anymore and they're not allowed to just kill you.

  5. Kevin Lyda says:

    No, no, no, no.

    Life expectancy for a working age, 21 year old has not really increased much at all. It's children - who do not contribute to Social Security - who survive longer. In addition, Social Security pays out money to widows and orphans.

    Paul Ryan isn't 65 and yet from the age of 16 to 18 he received Social Security payments due to his father's death. With people living longer, children will be less likely to receive such benefits.

    Seriously, people need to learn a lot more about stats and actuarial tables and how SSIA actually fucking works before they talk about it.

    Once they do they'll realise we should increase benefits, lower the retirement age, remove the contribution cap and add SSIA taxes to capital gains income. Social security will be fully solvent, poverty amongst the elderly will go down, unemployment will go down and corporate profits will go up. Everyone wins.

    • Kevin Lyda says:

      Except people who can't do math and yet insist on writing stories that depend on math. Which is good. Because they should all fucking die in a fire.

    • Nick Lamb says:

      Well, "not really increased much at all" is a bit of an exaggeration. Just in my lifetime the expectancy at age 21 has increased by about 5 years according to the tables I've looked at. If everybody is going to retire at the same age as before, but live five years longer, that's going to cost a bunch more. So that's why this is a debate at all.

      The "All that changed was infant mortality" people are getting to be almost as bad as the "everybody used to die by age 40" fools. The statistics don't say either of these things. During the 20th century we made significant strides with both reducing infant death and delaying death in the elderly. Most importantly to a debate about retirement, we've been doing fairly well at improving the length of time in which a person can expect to experience "generally good health", and thus be able to actually enjoy being alive rather than merely surviving to make the numbers look good. I hope I don't go too far in suggesting that's what really matters.

      • Kevin Lyda says:

        There was a recent decent upward trend - likely due to reducing smoking. The next upward trend will likely be due to reduced driving but that won't yeild quite the same boost.

        Nonetheless, the life expectancy of a 20 year old man was 67 in 1940 - which is different the 61 (based at birth) that the article states. And it's only around 79 now - nearly 75 years later. Compare that with the life expectancy at birth figures for men from 1940 and now: 60 and 78 respectively.

        And Social Security was designed with increases in life expectancy in mind since they had been seeing such increases for decades by that point. If you read the SSA publications from the time (and even from now) you'll find all this was discussed.

        In addition, Social Security is an insurance policy. Not a retirement policy. It pays out in a number of circumstances, turning 65 (or is it 67 now?) is just one trigger to receiving SSA benefits. And while retired worker beneficiaries have risen, survivor beneficiaries have dropped (like the ones US Rep. Paul Ryan received from age 16 to 18 when his dad died).

        The fact that it's not a pension causes very strange debates. One line of attack on SSA is that beneficiaries are rising and it will run out of money. The other line of attack is that you don't get much return on your investment in Social Security. But it's not a pension, it's not an investment. It's insurance.

        Most of us will pay loads more money into home/fire insurance than we ever get out of it. Some people will get "lucky" and their house will burn down and they'll get way more money out than they ever paid in.

        The same is true of Social Security. Some people will be "lucky" and will be born disabled, their parents will die and then when they get married their spouse will die and then they'll live to 90 and all along they'll get Social Security benefits of one form or another and it will far exceed anything they pay in (if anything). Lucky them. The rest of us will only collect if we reach retirement age and we'll likely get far less than we paid in. Gosh, aren't we "unlucky."

        Those damn disabled orphaned widowers get all the luck. They're probably laughing it up down at the pub with the guy whose house burned down.

      • Kevin Lyda says:

        And if you're really, really concerned about Social Security solvency, then support the things I mentioned: remove the contribution cap, make cap gains subject to at least some FICA taxes. Support increasing the minimum wage.

        If that all seems too idealistic, support reducing border controls and increasing illegal immigration. They subsidize Social Security to the tune of billions every year, and they're never going to get it.

  6. My Dad is 88 and still working intermittently as a sales rep. I'm sure he'd like to retire. He's so old he does have a bit of a pension from some old job, but I expect to be working until I die. Especially since student loans and mortgage won't be paid off until I'm 70 or so. (25 years from now. I'm a late bloomer.)

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