Social Security: What's Fair?

If Americans are living longer, then it makes sense to raise the age at which retirees can collect their full Social Security benefit. Right?

Maybe. If gains in life expectancy are evenly distributed to rich and poor alike, then it might make sense. But if gains are skewed, favoring the affluent and educated, then it might not be fair at all. "If gains in life span are increasingly concentrated among the well-to-do, it seems unfair to ask the less affluent to bear the main burden of an aging society," say the authors of a Center for Retirement Research study of the issue.

Concentration among the well-to-do is, in fact, what's happening. In an analysis of decades of data from the Health and Retirement Study, the CRR researchers found great disparities in life expectancy gains by socioeconomic status. Overall life expectancy for men aged 55 climbed five years between the 1920 and 1940 birth cohorts, but the gain was only two years for the poorest men and six years for the richest men. Among women aged 55, life expectancy actually fell for the poorest and grew by two to three years for the richest. "The current policy of raising the retirement age for everyone seems unfair to lower-income workers whose life expectancy may be constant or falling," concludes the report.

Source: Center for Retirement Research at Boston College, Differential Mortality and Retirement Benefits in the Health and Retirement Study