Forget 65, Americans should retire earlier
Economics editor Chris Farrell
TEXT OF COMMENTARY
Chris Farrell: Forget raising the retirement age. The goal should be to lower the age of retirement. Yes, you heard me right. How 'bout making it possible for everyone to retire at 55. What's more we can afford it.
Tess Vigeland: Economics editor Chris Farrell.
Chris Farrell: Too much of the discussion about the future of Social Security takes a doom and gloom tone. We're told again and again that to avoid financial ruin, we must make painful sacrifices. Yet the ambition should be to create a system that allows for greater freedom of choice for everyone in the last third of life, whether that means work or leisure -- or both.
There are many ways to keep the system solvent without hiking the retirement age. If the economy is healthy and prosperous, fears of a financial collapse fade into the mists of time. Don't want to bank on economic growth? How about doubling the cap on annual wages subject to the payroll tax, or lift it altogether? That policy change alone erases most of the projected future deficit of Social Security.
That's fine as far as it goes. But let's make the system better.
Nobel Laureate Robert Fogel has proposed a mandatory savings plan that would exist alongside Social Security. The savings would be yours, and the money would give everyone the realistic option of retiring around 55. If the typical household put 15 percent of its annual income into retirement savings, they could be financially free to pursue passions when they're 50-something.
Of course, the details of how we do it are almost less important than the bottom line. America is the world's wealthiest nation. We're also healthier and better educated than previous generations. The nation is rich enough to allow everyone to retire early, free to pursue their passions and their dreams.
Retirement used to be something only the wealthy could afford. Everyone else needed an income, and most aging folks struggled to get work even as their faculties deteriorated. For decades, social activists called for a system to provide the elderly a steady income. The dream became reality starting with the Social Security Act of 1935. It became possible for people to think of their last stage of life as a time of leisure, recreation and enjoyment. It's a remarkable social achievement that should be built on and expanded -- not contracted.