I conducted my own “net present value” analysis of the value of taking “early” benefits versus benefits at “normal” retirement age, four years later. Assuming that inflation will be about 3% per year (with Social Security benefits increased accordingly) and that my after-tax return on investments will average 5%, I would need to live well into my 80s to gain by waiting to take my benefits. Even if I live that long, by then I doubt that the modest additional income will improve my quality of life very much.

If I had conducted the analysis incorporating actuarial data (i.e., reducing the value of future benefits by the probability that I will die and not receive them) then the case for taking benefits immediately would have been even more apparent.

What this says is that people who take early benefits, on average, gain more than those who take later benefits. So, either pushing up the age of early benefits or further reducing the relative size of those early benefits would tend to equalize things. It would also provide an incentive for people to work longer — which is really the only fundamental, sustainable solution to the problem of the economy being able to support retirees at a comfortable standard of living.

Interesting comment by ted44 re: early retirement benefits. Another way to encourage folks to work later in life is to incentivize that outcome by improving the quality of life via single payer health coverage for all Americans and democratizing the workplace via encouragement of worker autonomy(unionization). If Chamber of Commerce-sponsored organizations like the Show-Me Institute had its way, we would be living in a very retro world: the Roaring Twenties/the Great Depression era, when old people either got sick and died or sold apples on the street corner to make ends meet. It’s time to shift the balance back in favor of the common working folks and away from the glitzy rich, who chase global profits while draping themselves in our flag.

In response to post #2:

1. I happen to agree that universal, single payer health insurance would be desirable as a means of improving both equity and economic efficiency, but I can think of only one weak reason why that would encourage people to work longer. That is this: by encouraging more people to have regular preventive care, it would improve the overall level of people’s health and thereby enable some people to work longer who otherwise would not because of preventable disabilities.

2. In order for increased unionization to encourage people to work longer, unions would need to totally reject many of the reactionary anti-market principles that they have historically “fought for,” such as the idiotic notions that (a) people with the most seniority must be paid the most, and (b) older workers need to retire in order to “make room” for younger workers.

What is needed is a more enlightened attitude by employers and employees alike that recognizes the social desirability of people working longer, combined with the economic reality that they often lose some of their productivity as they become older. This means that ways should be devised of allowing people to “cut back” their working hours and responsibilities as they grow older, AND in many cases accept lower pay per hour (and/or fewer benefits).

For either government or unions to mandate that employers keep older workers on the payroll at the same (or an increasing) rate of pay and benefits would be a sure formula for older workers to be laid off altogether. THAT is what would cause the skills of many older people to be wasted performing low-skilled jobs such as parking lot attendants and “greeters” at big-box stores (who, incidentally, are there primarily to discourage shoplifting).

The baby boomers will never go for this. That generation will continue to engorge themselves and make sure that they are comfortable. Gen X and Gen Y will have to watch it, though. We will break our backs and die supporting this generation of entitlement.

I was wondering when the Show-Me Institute or their allies would finally pony up and put in their two bits! They plan to divide the people generationally just as they do with regard to race, Red State vs. Blue, etc. in order to confuse folks. Wake up, my fellow Americans and do not be deceived by the running dogs of global capitalism!