Published September 19, 2023
Most conservative plans for solving the looming Social Security crisis involve raising the retirement age. That’s an idea that has merit but is also one that requires careful tailoring to ensure it doesn’t hurt blue-collar and minority Americans.
Social Security is the primary source of retirement income for a large number of Americans. Touching it has always been controversial: People rightly fear losing their income at an age when it is difficult, if not impossible, to replace through work. Conservatives have been especially politically vulnerable on this issue because, rightly or not, they are often perceived to care more about saving money than protecting people’s quality of life.
That’s why talk about raising the retirement age must be approached carefully. It’s not enough to note the increase in life expectancy over recent decades. That rise masks very politically important differences that an across-the-board hike overlooks.
It’s true that life expectancy has increased since Social Security’s finances were last overhauled in 1983. Americans lived an average of 74.6 years back then. Even with recent pandemic-era declines, Americans born now can now expect to live 76.1 years. This change is behind the calls to hike the retirement age from its current 67 to something higher.
The problem with this superficially appealing diagnosis is that Americans from different backgrounds and races don’t share the same life expectancy. Blacks have long lived shorter lives than whites, even though that gap has closed significantly since 1983. Class differences, however, are both less reported and more significant.
Americans without a college degree live much shorter lives than those with a four-year degree. Research from 2021 shows that life expectancy rose for college-educated Americans by nearly six years, from 79 to almost 85, between 1990 and 2018. The non-college-educated, however, saw only a one-year increase, to about 77 years. More troublingly, their life expectancy started to fall in 2012. As of 2018, non-college-educated Americans could expect to live almost eight years less than their college-educated peers.
These facts mean that any increase in the full retirement age is likelier to be worse for non-college-educated Americans than it would be for college-educated ones. Hiking the retirement age for everyone would mean that more non-college-educated workers never receive any benefits because they would die before they were eligible. Those who did live to retire would also collect less from Social Security because they would live shorter lives than the college educated.
This fact actually understates the fiscal challenge stemming from a uniform hike in the retirement age. Non-college-educated Americans have much more strenuous jobs than do college-educated workers. One study found that roughly half of workers with no college degree regularly carried heavy loads and also had no control over their schedules, and more than a third stood all the time during their work. They are also likelier to suffer a disability, leading them to go on Social Security Disability Insurance at higher rates than college-educated workers. These factors have led non-college-educated Americans to retire more than two years earlier than college-educated workers.
That trend to taking early retirement or going on disability would likely increase if they had to wait even longer to receive full Social Security benefits. People in pain or with hard, boring jobs are likelier to accept the steady income these programs provide rather than hold out for a slightly larger paycheck.
That would mean more blue-collar people living on lower incomes during their retirement. Social Security adjusts its benefits on a sliding scale based on the relation between the full retirement age and the age at which one retires. Someone retiring at the earliest retirement age, 62, currently receives 70 percent of the full monthly benefit. That amount stays constant, with annual inflation adjustments, for the remainder of the person’s life.
Raising the age would lead to a significant income cut for early retirees. The Center on Budget and Policy Priorities, a left-leaning group, estimates that raising the retirement age from 67 to 70 would cut monthly benefits for people retiring at 62 from $1,400 to $1,140. College-educated workers, who typically earn more doing less-taxing jobs, could easily get around this cut by working an extra year or two. Blue-collar workers can’t and won’t.
This fact will also encourage more blue-collar workers to go on SSDI. People on disability insurance get their full retirement benefits regardless of when they qualify for the program. When they reach the full retirement age, they then get shifted over to the pension program, a mere accounting maneuver.
The fact that SSDI recipients who are disabled for 24 months also qualify for Medicare regardless of age makes the program an even more attractive alternative to working longer.
Given these facts, a prudent conservative would not simply propose a uniform increase in the retirement age. What’s needed is a more innovative plan reflecting the realities of modern life.
That plan would have three parts. First, it would increase the retirement age only for people who can adapt to it. That could mean looking at a prospective retiree’s net worth, imposing a higher age on people who have saved a lot on their own. It could also mean conducting comprehensive physical assessments at age 62 and assigning a full retirement age based on an individual’s health. The details are important and can differ, but the principle is the same: Raise the age for people who don’t need to retire earlier.
The second component would look at the early-retirement program. It makes little sense to raise the early-retirement age given the physically demanding labor many of those who file for it have endured. It’s not fair for them to take a large benefit cut simply because better-educated people have easier jobs and can afford to work longer.
That would mean changing the program to reduce the sharp benefit reductions that recipients would otherwise face under the current formula. One can pay for all or part of that change by also reducing the extra benefits people currently get if they delay retirement until after the full retirement age. This is also fair, as those who can afford to delay filing for Social Security until age 70, when one’s potential benefits currently max out, are also likely to be those who are least dependent on the program for the bulk of their retirement income.
The final factor would be a revamp of the disability program. Examiners consider an applicant’s education, age, and work history in addition to medical criteria when determining whether an applicant qualifies for benefits. This means that older, blue-collar workers who are deemed to be less likely to switch careers are much likelier to be awarded benefits. Depression or other mental issues can also qualify someone for SSDI benefits.
Failure to change the program to better help these people re-engage with the workforce would undercut any effort to raise the retirement age. Reforms could include the provision of rehabilitation or counseling services to help someone overcome disabilities. It could also involve some form of subsidized wage to ensure that someone who could work part-time doesn’t suffer economically. The point is to better ensure that the people able to adapt to a changed program bear the brunt of the changes.
A reckless, one-size-fits-all approach to reforming Social Security is guaranteed to cause conservatives problems. A tailored effort that provides help to the deserving while pushing any cuts only on those who can bear them will be both politically and fiscally advantageous.
Henry Olsen is a senior fellow at the Ethics and Public Policy Center and the author of The Working-Class Republican: Ronald Reagan and the Return of Blue-Collar Conservatism.
Henry Olsen, a senior fellow at the Ethics and Public Policy Center, studies and provides commentary on American politics. His work focuses on how America’s political order is being upended by populist challenges, from the left and the right. He also studies populism’s impact in other democracies in the developed world.