WASHINGTON, June 11 - Americans turning 65 this year can expect to live, on average, until they are 83, four and a half years longer than the typical 65-year-old could expect in 1940. And government actuaries predict that American life spans will just keep growing.
This demographic trend - by 2040, the average 65-year-old will live to about 85 - has major financial implications for Social Security and major political implications for the lawmakers now trying to overhaul the system.
So what's the response from the dolts in Washington: "What crisis?"
Here's the problem. The original Social Security program was designed 65 years ago in 1937. But it was fatally flawed because it did not adequately anticipate future rates of inflation or life expectancy. In 1937, CPI averaged 1.4% per year over the previous 25 years. Since then, it has averaged 4.0% per year. Life expectancy then was 60 years. Today it is 77. Any remedy to the present retirement system must comprehend and solve the unpleasant unpredictability of both these factors.
The Solution: Pay promised benefits to those 58 and older. Bump the retirement age for younger workers to 75 or 76 (and index based on life expectancy). Cut benefits for younger workers (pre-58). Allow younger workers to invest a small percentage in private accounts.
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The solution sounds nifty, except for one problem -- what is the Government's response supposed to be when the elderly in poverty don't have any personal accounts, no retirements savings, and the SS program is caput? We haven't learned how to practice "tough love" with all of our poor to date, what makes us think we will 20 years from now when the next generation of workers retires with no retirement savings?
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