The Right and Left don’t agree on much these days. But over on X, people on both sides of the political spectrum recently united to lambaste conservative commentator Ben Shapiro for speaking some simple truths about the untenable trajectory of retirement.
“No one in the United States should be retiring at 65 years old. Frankly, I think retirement itself is a stupid idea unless you have some sort of health problem,” Shapiro said on March 12. “But put all of that aside, just on a fiscal level and on a logical level, when Franklin Delano Roosevelt established 65 as the retirement age, the average life expectancy in the United States was 63 years old. Today, the average life expectancy in the United States is close to 80. It’s totally insane that you believe that you should be able to work from the time that you are essentially 20 to the time that you are 65, which is a 45-year period, pay in, and then you’ll receive Social Security benefits sufficient to support you and your family, you and your wife or whatever, for, like, another 20 years. That’s crazy talk.”
As a qualitative judgment on the utility of retirement, Shapiro’s argument is backed by the data. While we can all agree that early pensions for physically taxing trades such as law enforcement and military service exist for a very good reason, studies seem to indicate that earlier retirement is correlated with earlier deaths, while delaying retirement is connected with later deaths. While Democrats feel vindicated in their proven fears that Ruth Bader Ginsburg would die while a Republican president had the power to fill her seat, the Supreme Court justice is widely understood to have avoided retiring specifically because she believed slowing down would bring about her demise more quickly.
But it’s a matter of pure math in which Shapiro is undeniably correct.
For the overwhelming majority of human history, the entire concept of retirement was considered ridiculous, as men and women in the Western world have worked for pay until their deaths for centuries. An inadvertent consequence of communism, it wasn’t until the conservative Otto von Bismarck, in an attempt to stymie the ascension of Marxists in Central Europe, proposed a pension for Prussians aged 70 and older to the Reichstag.
When Social Security was established in 1935, the retirement age was set at 65, the same age as today. But average American life expectancy, even after the COVID-19 pandemic and self-inflicted “deaths of despair,” is up 23% from 1940. Even so, the full retirement age for those born after 1959 is just 67.
Economists C. Eugene Steuerle and Glenn Kramon calculated that for seniors today to take the same amount of time retired as Social Security recipients did in 1940, they should stop working around age 77. That’s over a decade older than what Social Security incentivizes, the same age as presumptive Republican presidential nominee Donald Trump, and four years younger than our current president.
The proposed solution by Shapiro’s haters is the bipartisan consensus of “doing nothing.” Republicans justifiably would not stand for increasing the payroll tax, and neither Republicans nor Democrats are interested in increasing the retirement age, not even in the long term. This means that benefits will be cut across the board by an average of 23% upon insolvency, which will come in nine years.
Considering that Social Security and Medicare spending are projected to comprise the overwhelming majority of future deficit expansion, the refusal to reform these programs directly translates into higher inflation and, thus, persistently higher interest rates, which, in turn, fuel each other. That means young workers struggling to afford family formation and home ownership are further penalized to fund the wealthiest generation in human history.
And as Social Security and Medicare spending are projected to consume more than 10% of our annual economic output by the end of this decade, our defense spending will fall to about 2%.
Recall that should Congress wish to stave off insolvency without spending reform, payroll taxes would need to rise by at least 25%, and balancing the budget without touching entitlements or defense spending would require decimating the nondefense discretionary budget by nearly 90%. Hiking the payroll tax by 25% could fill in the void of the Social Security trust fund once insolvency hits. But again, beyond how politically unpalatable such a measure would be, it would crowd out a significant portion of the economic growth and consumer spending currently fueling the economy.
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And, of course, none of this is to deride separate, earlier pensions for public servants in uniquely physically taxing professions. Nobody is saying that firefighters should be forced to work into their 70s, and that is precisely why taxpayers fund those separate pensions. But especially as automation forces workers into less physically intensive jobs, Social Security’s retirement age needs to be moved up, lest its benefits are dramatically scaled back.
The American experiment was built by the Protestant work ethic, and writers from the Puritans to Niall Ferguson and Joseph Henrich today have inadvertently echoed Shapiro’s moral position on the virtues of continuing to find purpose in work. But as a matter of simple math, America’s early retirement is a bad deal for all of us.
