Lloyd Blankfein, the 57-year-old CEO of Goldman Sachs, who was paid more than $16 million last year, appeared on CBS last night to talk about the Fiscal Cliff and lay some truth on the American people: You all need to work longer.
You can look at history of these things, and Social Security wasn't devised to be a system that supported you for a 30-year retirement after a 25-year career. ... So there will be things that, you know, the retirement age has to be changed, maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained.
As Ezra Klein and others before me have noted, it is very easy for people like Blankfein who are paid outrageous sums of money to sit in offices, think, and talk to tell Americans they should delay retirement. After all, they probably aren't pining for the day they get to stop working. Same goes for senators who would prefer to croak while prattling on during a floor speech and for national journalists who intend to keep writing until they finally go blind from staring at a computer monitor. They like their jobs. They don't want to leave them.
However, it might not be so easy for your average American, particularly one with a numbingly repetitive or physically taxing occupation, to work those extra years.
It turns out that raising the retirement age is also one of the more regressive ways to cut benefits. That's because the more Americans make, the longer they live. The less they make, the shorter they live. Over the past thirty years, almost all of the gains in life expectancy among men at age 65 have gone to the top half of earners. (as shown in this graph courtesy of the Incidental Economist).
There are dozens of approaches available to us for fixing Social Security's long-term funding shortfall that wouldn't disproportionately strike the low-income, such as changing the formula for cost of living adjustments, reducing benefits for particularly high earners, or changing the cap on taxable income There's no reason why we should pick one that places most of the burden on, say, the guy who works behind the butcher counter at your local grocery store instead of Lloyd Blankfein.
UPDATE: November 20, 6:18 PM
A few commenters have brought up Blankfein's comment that Social Security was not designed to support 30-years of retirement following a 25-year career. I assume he was just making a rhetorical point. At earliest, you start receiving Social Security benefits at age 62, in which case they'll be reduced significantly. But unless you only started working at age 37, chances are you'll have been on the job for more than a quarter century. One reader suggested that perhaps Blankfein was conflating Social Security with the generous retirement packages many union members receive, especially in the public sector. I think it's more likely he was just trying to express the idea that Social Security wasn't designed to be a cushy program in its early days. And that may be true. But there's a difference between offering every American a gold-plated guaranteed pension and allowing people to finally take a rest at a reasonable age.