Social Security at age 60?

[cashbalancetrouble]

Rep Kucinich wants to introduce a bill to create 1 million jobs by allowing collection of SS retirement at age 60. They would actuarily reduce the benefit. Projected only cost would be to provide Cobra for health care.
More at:
Rep. Kucinich's plan to create 1 million jobs: Pay some workers to retire early | Opinion, Editorials, Letters and Columns from The Plain Dealer - cleveland.com - - Opinions, Editorials, Letters and Columns from The Plain Dealer - cleveland.com

Sounds like not a very well thought out idea, in its infancy at this point. But being already retired early, might be a method to take the benefit early.

 

[MasterBlaster]

New federal Stimulus Plan

Just think of all the jobs he would create if people could take SS at 40.

 

[JustNtime]

Well it has my vote too. Perhaps it may even take more than one person to replace an experienced retiring person to obtain similar productivity.
Let's see the benefit should be about 62-3% of full benefit. If they drop back another two years to 58, they could advertise it as ~ half benefits.
I'd take it in a heartbeat, and as long as the payback provission is in place, I'd consider using that every few years to slide up the scale.

 

[Independent]

For people like you who are already retired and not eligible for SS yet, this would provide one more option.

Because any "actuarial reduction" in benefits would be based on averages, people who aren't average could see an opportunity. The obvious case is someone in poor health who can start SS sooner. There is also the case of the lower income spouse (usually wife) who might collect a couple extra years on her income record before switching to her husband's.

Both of these are extra expenses that Kucinich probably isn't including in his cost estimate.

I expect most people on this board would still wait until much later to collect SS.

The 1 million and $15 billion estimates say that 25 percent of the people between 60 and 62 are so close to retirement that a $15,000 subsidy from the Federal government would push them over the line. I don't know if that's true, maybe someone else has an opinion. I do know that the median US wage is around $40,000. So this means that those same people will (could) retire anyway in about 6 months. Again, that may be more obvious to the people around here than to the typical Representative.

(Of course, there is the obvious comment that this doesn't "create" 1 million jobs, it simply changes the faces in those jobs.)

 

[JustNtime]

But it could take a million folks <or more> out of unemployment lines. The reduced amount of unemployment benefits paid might reduce <or eliminate> cost of the program. Part of my tongue and cheek early retirement justification is that I'm allowing at least a couple of people employment by retiring early. A couple because I was at least twice as productive as the average 'bear'. My taking a job would essentially put two people out of work. I know I could try to be less competent and only put one person out of work, but I just don't work that way, I was <or am> a workaholic. I just have to stay away from that first 'drink' to stay 'sober'.

It could produce some extra jobs to make up for the lost productivity of experienced employees retiring early.

Another way to reduce unemployment would be to incentivize a stay at home spouse. Not exactly PC, but perhaps, if the incentives currently given to two income families were slowly reduced or eliminated <child care credit for example> then the faces in the jobs could also be changed. There do not appear to be sufficient jobs available to support a large percentage of two income families in this country.

 

[ziggy29]

That doesn't create jobs. It just has the potential to "transfer" jobs from people of (potentially) lesser need to areas of greater need, and perhaps get people off the unemployment rolls.

But in reality, if these people still lose their employer health insurance and would have to pay exorbitant rates for health insurance until they turn 65 since they no longer have Megacorp coverage, I don't know how many people would bite.

 

[FUEGO]

Another way to reduce unemployment would be to incentivize a stay at home spouse. Not exactly PC, but perhaps, if the incentives currently given to two income families were slowly reduced or eliminated <child care credit for example> then the faces in the jobs could also be changed. There do not appear to be sufficient jobs available to support a large percentage of two income families in this country.

The setup has already done a pretty good job of this, at least at lower middle class incomes and less. Take a husband and wife that each make ~$30,000. At $60,000 total income, they are phased out of many of the tax credits and welfare-ish programs out there. Add in tens of thousands in childcare, and it just doesn't make sense for both spouses to continue working, when one spouse could stay at home and then have the household taxable gross income be reduced to $30,000, avoid potentially ten(s) of thousands in childcare costs, and getting $5000 or so in Earned income credits, not to mention many other welfare-ish programs they might qualify for at a near-poverty level income.

And in 2011 when the Bush tax cuts expire, the marriage penalty will get worse, further incentivizing the stay at home spouse.

This is assuming that people can do the math on this, that the candidate stay at home spouse doesn't like working or value furthering their career, doesn't mind the stigma of public assistance, etc. And that they can afford to do this, if it would in fact result in a slight net reduction in income all things considered.

 

[ziggy29]

The problem with encouraging single income households is that it creates a single point of complete financial failure with a layoff.

In an era of great job security I think this could be feasible, but as things are right now, many households want the "insurance" of a second paycheck and a backup set of health insurance benefits. It's much easier to tread water for a few months -- or even a couple years -- that way than when you lose your only paycheck and your only affordable health insurance option.

As long as corporations are so quick to issue pink slips, I will not be comfortable being a single-income household even if it makes *zero* financial sense for my wife to work while I'm fully employed.

 

[ziggy29]

One other thought: There's no way that if a million people aged 60-61 left their jobs, business would hire a million currently unemployed people.

Layoffs cost money and if there is a *marginal* business justification for a layoff (or if it just barely does *not* make financial sense) they may not do it. But such a marginal case becomes a no-brainer to just eliminate a position if they don't have the costs of a layoff embedded into shedding an employee.

I'd wager we'd be lucky to see one new hire for every two voluntary early retirements.

 

[youbet]

That doesn't create jobs. It just has the potential to "transfer" jobs from people of (potentially) lesser need to areas of greater need, and perhaps get people off the unemployment rolls.

.

That's right. And it also doesn't increase the size of the basket of goods and services being produced and shared by the total population. The same number of people would be working and producing as today. So, the same amount of goods and services shared by the same population. Things are just "redistributed" with the non-working sharing the output of the working by consuming the working folks' SS payments........

I'd really like to see folks (NOT me) get back to work and increase the quantity of goods and services we have to split amongst ourselves.

If we aren't going to try to fix the unemployment problem with more jobs, as opposed to redistributing the same jobs differently and calling the current unemployed folks the "new SS recipients", then we better start working more seriously on population control. Continuting to have a positive birth rate, allowing immigration, etc., will simply mean splitting the same basket of goods and services (GNP) amongst more folks.

 

[FUEGO]

For the record, if they offered DW and I the 99 weeks of unemployment insurance right now, I think we would take it.

That would amount to just over $100,000 over the course of 2 years, but I'd be willing to take it. You know, for the good of the cause. Help out those in need, etc.

Maybe use some of that money to stimulate a tropical destination's beach economy somewhere warm.

 

[FUEGO]

The problem with encouraging single income households is that it creates a single point of complete financial failure with a layoff.

In an era of great job security I think this could be feasible, but as things are right now, many households want the "insurance" of a second paycheck and a backup set of health insurance benefits. It's much easier to tread water for a few months -- or even a couple years -- that way than when you lose your only paycheck and your only affordable health insurance option.

As long as corporations are so quick to issue pink slips, I will not be comfortable being a single-income household even if it makes *zero* financial sense for my wife to work while I'm fully employed.

Interesting you say that. Elizabeth Warren, the person appointed to chair the Congressional Oversight Panel overseeing TARP and bailout money, has written basically the exact opposite. She writes that the two income family has actually led to economic destabilization because people get dependent on two incomes, and then are crushed when one partner loses their job and income. She argues in her book The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, that families were better off when the wife stayed at home, since she could find employment in a pinch to make ends meet while the father looked for a new job.

The implicit assumption in Ms. Warren's book is that the two income earner family could not have possibly lived on less than the sum of their two incomes, hence making losing one income non-catastrophic. However the same family could have lived adequately well on just a single income until a job loss were to occur.

 

[bizlady]

I'm not sure yet how I feel about reducing SS to age 60. But I do wish they would drop the age for access to your retirement funds too 55 without penalty, which is an age many pensions kick in. That would cost the government the income for the 10% penalty, but might allow some to retire early without penalty.

I also think they should allow some tax credit for Roth contributions for those relatively young, still establishing themselves in careers, starting families and paying a mortgage... maybe age 21- 35 for example. Too many young people don't get it or are too strectched financially to consider the future....

 

[ziggy29]

She argues in her book The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, that families were better off when the wife stayed at home, since she could find employment in a pinch to make ends meet while the father looked for a new job.

The problem with this thesis, IMO, is that it seems to ignore the fact that people are most likely to be laid off when almost no one is hiring. So assuming the wife would be able to find a job in such an economic environment that caused her husband (and many others) to lose their jobs and also be looking for work is, at minimum, extremely optimistic and at most, "fantasyland" and extremely reckless financial planning.

The implicit assumption in Ms. Warren's book is that the two income earner family could not have possibly lived on less than the sum of their two incomes, hence making losing one income non-catastrophic. However the same family could have lived adequately well on just a single income until a job loss were to occur.

Until a job loss. Then their household income loss is practically 100%, minus the value of severance (if any) and whatever public assistance they received. AND their expenses likely go up because they have to pay for all of their health insurance out of pocket. Two equal-income earners in a situation where one loses their job probably only loses 30-40% of their after-tax income, PLUS unemployment for the spouse who lost their job, PLUS (probably) being able to move to the other spouse's health insurance.

I've seen too many economies where a lot of people are getting laid off and no one is hiring to follow her conclusions, frankly. I don't see how job loss in a single-income household could possibly be less devastating than a single job loss in a two-income household, especially for households that don't feel compelled to spend every nickel of their income.

 

[FUEGO]

I also think they should allow some tax credit for Roth contributions for those relatively young, still establishing themselves in careers, starting families and paying a mortgage... maybe age 21- 35 for example. Too many young people don't get it or are too strectched financially to consider the future....

They already do. Retirement Savings Contributions Credit. Up to $2000 credit for a married couple if you contribute $4000 to your retirement accounts. That's a 50% credit for some folks.

Fairly low income limits before the credit is phased out though.

 

[ziggy29]

But I do wish they would drop the age for access to your retirement funds too 55 without penalty

Assuming you've separated employment at that time, 401K plans already do.

 

[FUEGO]

I've seen too many economies where a lot of people are getting laid off and no one is hiring to follow her conclusions, frankly. I don't see how job loss in a single-income household could possibly be less devastating than a single job loss in a two-income household, especially for households that don't feel compelled to spend every nickel of their income.

I absolutely agree with you. I thought this particular conclusion in Ms. Warren's book was incredulous.

 

[JustNtime]

Even if this proposal only created one job for every two, because it simply reduced the number of lay-offs by the remaining portion. The net result would be a million less on unemployment and perhaps some savings... Need more jobs for the unemployed, reduce the age again to 58. Perhaps with reduced SS benefits being offered earlier, those retiring from jobs like military, police, fire, etc. would be able to really retire and NOT have to take jobs with contractors <or beltway bandits>. I suppose some would still get offers, that would be hard to refuse.

I like the idea of allowing earlier withdrawal of 401/IRA funds without penalty, but this can currently be done with SEPP. So thats not that much of a change.

I really don't see a business model for hiring back ERs to produce more goods when there already appears to be a supply glut and people being laid-off. Perhaps if there were a scarcity of goods and services this might make sense, but to simply make more because we can seems counterproductive. Without a profit, the business goes under and no one is employed.

 

[ziggy29]

I really don't see a business model for hiring back ERs to produce more goods when there already appears to be a supply glut and people being laid-off. Perhaps if there were a scarcity of goods and services this might make sense, but to simply make more because we can seems counterproductive. Without a profit, the business goes under and no one is employed.

This, to me, would be the single most compelling reason in favor of doing something like this -- I just don't see ANY economic forces in the near to intermediate future (going out to 5-10 years, say) which are likely to create significant additional demand for labor over the age of about 50. The combination of weak growth and rampant age discrimination will see to that. What little job growth there is in the near future will be more than absorbed by the unemployed and underemployed younger folks that employers would rather hire.

Some people have argued that at least part of the original idea behind Social Security was to create a system which would use financial incentives to encourage the eldest workers to leave the work force in order to ease unemployment among the young. This would simply be an extension of such an idea.

 

[samclem]

Part of my tongue and cheek early retirement justification is that I'm allowing at least a couple of people employment by retiring early. A couple because I was at least twice as productive as the average 'bear'.

I've got the opposite problem. When I quit full-time work the three folks who had to fix all my mistakes and send out apologies are now unemployed. Now I feel guilty.

 

[stevenst]

Seems to me that a lot of folks on here (well, me at least) worry more about health care costs than Social Security as an income stream when considering ER. If Medicare were dropped to age 55, I think there might be a mass exodus to the exit . Expensive, though.

 

[JustNtime]

I've got the opposite problem. When I quit full-time work the three folks who had to fix all my mistakes and send out apologies are now unemployed. Now I feel guilty.

Perhaps your replacement is using six folks to do that job for him/her... Guilt free ER...

 

[ziggy29]

If Medicare were dropped to age 55, I think there might be a mass exodus to the exit . Expensive, though.

One *huge* problem with Medicare at 55 is that unless insurers stop issuing individual policies at 55 -- that is, unless people over 55 are *forced* into Medicare -- Medicare will get all the high-risk and less healthy people over 55 while the healthy ones get cheaper insurance privately.

I really don't think "optional" Medicare below 65 would work because of the massive adverse selection cost problems it would impose on Medicare.

 

[jimnjana]

One *huge* problem with Medicare at 55 is that unless insurers stop issuing individual policies at 55 -- that is, unless people over 55 are *forced* into Medicare -- Medicare will get all the high-risk and less healthy people over 55 while the healthy ones get cheaper insurance privately.

I really don't think "optional" Medicare below 65 would work because of the massive adverse selection cost problems it would impose on Medicare.

I think if someone wants into medicare early, they should pay full price for it, or pay increased premiums for the rest of their life, at any rate, it should cost tax payers nothing.

 

[growing_older]

I think there was more to the two income trap than just discretionary spending of double incomes. Particularly competition for adequate housing likely drives prices to higher levels where two incomes are required to purchase the expected lifestlye, as well as increased probablity of losing a job when there are two. Remember she is drawing broad general conclusions based on population trends, not describing any particular household, especially not a rare LBYM FIRE one.