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Relieving the pressure of bloating
May 30, 2010 - Mike Maneval
Business consultant Rick Dreyfuss of the Commonwealth Foundation was in Williamsport recently discussing public pensions at an event hosted by the Pennsylvania Economy League. Pension funds for public-sector workers, Dreyfuss said, are bleeding money in today's constricted economy, and the long-term expenses taxpayers may bear due to developments regarding the issue are ballooning.
I want to highlight one specific idea Dreyfuss brought to the table to shore up the financial footing of pensions I feel has merit: Increasing the age of retirement. But I want to take the idea further. Not only should the age of retirement under public-sector pension plans increase, but the age of eligibility for Social Security should increase as well - for both, on a regular basis.
When Social Security was established in 1935, the age of eligibility was 65, according to pbs.org. Today, partial benefits are available as early as 62 years of age, and an amendment by the Reagan administration to gradually add two years for others, lifting the age of eligibility to 67, delayed implementation of the change for 17 years.
Meanwhile, average life expectancy for Americans has risen much faster than Social Security's age of eligibility, from less than 62 years of age in 1935 to more than 73 years of age in 1980. Between President Reagan signing a two-year increase in the age of eligibility in 1983 to the policy's intended date to take effect in 2000, average life expectancy rose by more than three years, according to a chart on life expectancy available at infoplease.com.
As the 17-year gap in action demonstrates, changing the age of eligibility has proven to be politically challenging, even as Social Security benefits cover wider and wider swaths of time for Americans. One solution stands out to avoid the sisyphean task of preventing the bloating of this public asistance program, and could be applied to public pensions as well - take the matter out of politicians' hands and index the age of eligibility to average life expectancy.
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