tag:blogger.com,1999:blog-9036266.post8889015948320476036..comments2023-10-10T03:08:54.038-07:00Comments on The Bruce Web & Social Security Defender: Social Security Low Cost & the 100/100 TargetBruce Webbhttp://www.blogger.com/profile/13222670342780912788noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-9036266.post-33507603068058485082008-04-17T08:30:00.000-07:002008-04-17T08:30:00.000-07:00"The benefit at age 65 for a medium wage earner re..."The benefit at age 65 for a medium wage earner retiring today is $15,732 while for a similar worker in 2041 it's $20,901,"<BR/><BR/>Well I'll differ to you and Prof. Rosser on the numbers. But I would wonder about the definition of 'similar' here. A 65 year old taking retirement in 2041 is taking early retirement and so taking a discounted check to start with. Whereas I believe a 65 year old taking retirement in 2008 is still taking full retirement.<BR/><BR/>Well no. 10 seconds of research showed that a current 65 year old (and so born in 1942 or 1943) is only taking a partial haircut by retiring at that age instead of taking full retirement at 66. But I still have to wonder about apples and oranges here.<BR/>http://www.ssa.gov/retire2/agereduction.htm<BR/><BR/>"The new retiree post-TF exhaustion will receive a little more than todays' level, but still a lot less than he expected to receive."<BR/><BR/>Not if he reads the newspaper. The implied notion that this change would simply come out of the blue is itself a little nutty. The whole argument for 'crisis' depends totally on selling people on the idea that the change in 2041 is important, to simultaneously argue that people won't see that change coming doesn't make a lot of sense.<BR/><BR/>Either retirees will see a cut in benefits in 2041 or they won't. In either case they have plenty of time to plan. The fundamental problem for privatizers remains what it always has been-convincing people that a guaranteed phasing in of benefit cuts is better than some sudden benefit cut that may or may not happen. I own a calender, the idea that I should simply accept some package of tax increases and benefit cuts simply to avoid having some Gen-X slacker getting sticker shock in 2041 or 2046 or whenever because he never picked up his Kindle to read the news is just a non-starter.Bruce Webbhttps://www.blogger.com/profile/13222670342780912788noreply@blogger.comtag:blogger.com,1999:blog-9036266.post-90302813553767916562008-04-16T12:54:00.000-07:002008-04-16T12:54:00.000-07:00A couple quick thoughts:First, while wage indexing...A couple quick thoughts:<BR/><BR/>First, while wage indexing means that real benefits will be higher for future retirees, they won't necessarily be a better deal (which relates taxes to benefits, such as with the internal rate of return). People retiring today, for instance, have a lower retirement age and paid lower average taxes over their lifetimes. People in the future will have paid higher taxes (eg, the 12.4% rate would have been in place their entire careers) and the NRA would have risen from 66 to 67. Overall, their deal from the system will be poorer. For instance, see http://www.ssa.gov/OACT/NOTES/ran5/index.html) <BR/><BR/>Second, while 'Rosser's equation' may show that real benefits post trust fund insolvency will be higher than today's benefit, it's not nearly as extreme as you think. The benefit at age 65 for a medium wage earner retiring today is $15,732 while for a similar worker in 2041 it's $20,901, 78% of which equals $16,302. So it's about 4% more, not 24% more. <BR/><BR/>In any case, though, we shouldn't treat this as if it's not a big deal. The new retiree post-TF exhaustion will receive a little more than todays' level, but still a lot less than he expected to receive. Moreover, these cuts wouldn't just be for new retirees but for everyone. So the 90-year old retiree will also receive the 22% cut; she'll be receiving a lot less than she did before, and with no options to make it up.<BR/><BR/>The key is to start ahead of time. If you make changes smoothly then there's no need for trust fund exhaustion scenario. If things turn out better than we though we can always adjust along the way, but it makes sense to make small, predictable changes rather than take our chances with large sudden ones. <BR/><BR/>Andrew<BR/>http://andrewgbiggs.blogspot.com/Andrew G. Biggshttps://www.blogger.com/profile/16617460431856611873noreply@blogger.com