Why does raising the retirement age hurt young people?(governance.fyi) |
Why does raising the retirement age hurt young people?(governance.fyi) |
Turns out trying to get people to retire later is a bad idea
Cutting pensions would probably cause massive riots, so raising retirement age is only logical way forward to keep this social pyramid scheme alive a little bit longer.
Social Security will be solvent over the next 75 years, but 16% of the gap between spending and revenue remains in the 75th year, meaning the program is not yet sustainable.
YOUR POLICY SELECTIONS % OF GAP CLOSED
Slow Benefit Growth for Top 20% Of Earners 11% Limit Spousal Benefits for High Earners 3% Create Minimum Benefit at 125% of Poverty -3% Means-Test Benefits for Higher Earners 16% Tax All Wages Above $400,000 67% Apply the Payroll Tax to "Cafeteria Plans" 10% TOTAL 104%
And I increased benefits.
And yet, the more I look at it, the more I get the feeling that I might still have to get lucky to be able to retire at retirement age.
We can also examine it by pushing it further. What if the mandatory retirement age was 30? The wages for those under 30 will be higher because of supply and demand, but they'd also have to support all those people over 30 who are not contributing anything to the economy.
In the net, early retirement will lower the standard of living of those still in the workplace.
More specifically it would lower the standard of living for everyone, if you don't count free time.
It's very unlikely that we are actually currently at an ideal retirement age on the margin where a move in either direction hurts. If raising the retirement age hurts young people, then lowering the retirement age probably helps young people.
Does that sound correct to you? Would lowering the retirement age now help young people?
However, in many developed countries today’s pensions are mainly paid for by today’s workers, often through a combination of social contributions and taxes.
In Spain, for example, the social security has a large structural deficit that gets covered by large taxes on salaries, taking money from other social services, and sovereign debt.
In other words, young workers are forced to support retirees through means that make it much harder for them to build a future of their own.
This system is kept in place because pensioners are a huge 1-issue voting block that no political party wants to antagonise. I believe that this is somehow downstream of cultural changes that have made all of society more individualistic and self-centred, incapable to work together for a common future.
If one accepts this hypothesis, then raising the retirement age is good for all previously-working people, as they now have less people to support and more workers providing that support...
Yes? I'm not sure if I'm missing something you think is obvious. Lowering the retirement age will open up high seniority jobs that younger people can now promote into. You can see this in congress - despite millenials being in the 40s now they are rarely seen in high level political positions due to boomers and older sticking to their jobs.
> Similar to the House, the incoming class of Senators in the 119th Congress was also younger, with a median age of 50.4 years.
> The average age of Representatives is 57.9 years.
While Israel didn't build the next "Intel", it built the next Cisco (Palo Alto Networks), Symantec (Wiz), Akamai, and it's own "Intel" (Tower Semiconductors), and Israeli VC has absolutely cornered the Enterprise SaaS and cybersecurity industry.
Yet, concentrating on business creation seems to ignore the fact that high value industries like much of tech just don't generate that much employment.
The high-tech sector only represents a little over 11% of overall employment in Israel [0]
Median gross salary is around $2800/mo [1] yet tech salaries are around $10,000/mo [2]
While the tech industry is extremely prominent in Israel, it isn't a major employment generator. Most Israelis don't work in tech and are impacted by extremely high CoL - Israel has some of the highest cost of living among OECD countries [3]
This article posits that additional industrial policy can help rebuild large employment industries. While I am strongly in favor of industrial policy, most high value industries are high value EXPLICITLY because they are heavily automated or have low headcount requirements.
Industrial policy for the sake of generating employment simply doesn't work when high value jobs have significant barriers to entry (no, not everyone can code and not everyone can synthesize biopharmaceuticals).
[0] - https://innovationisrael.org.il/en/press_release/2025-high-t...
[1] - https://www.xn----1hcmgxnk8ede.co.il/%D7%9B%D7%9E%D7%94-%D7%...
[2] - https://www.bizportal.co.il/general/news/article/20017760
- Lower taxes for the ultra-wealthy
- People working longer to make the ultra-wealthy slightly wealthier; and
- Younger people getting padi less, again making the ultra-wealthy slightly more wealthy.
The entire policy and government appratus of the US in particular is designed as a massive wealth transfer from the poor and young to the old and wealthy.
There is no reason why the wealthiest countries on earth can't afford to let people who are 60 years old retire. Other than of course the wealthy would have to pay slightly more in taxes.
I can't find it now but I saw an article talking about all the social and policy ideas that unwittingly got tested in the Covid pandemic. The effects of giving money to poor people (it's not the moral hazard it's made out to be), how schools increase the spread of disease and a whole host of others.
Diligently save away and invest a portion of your income and you'll be alright.
As long as you were at least (say) 65, if you retired, you got $X/month for the rest of your life.
None of this "you only get to retire if you were lucky enough to make enough your whole life to save enough that it won't run out before you die—and don't guess wrong about when that happens!" None of this "too bad, the stock market crashed just when you were starting to pull out benefits."
Because due to the current brain dead policies of the GOP in the US, life expectancies in the US are falling.
So instead of storing up Social Security by making the ultra rich pay their fair share, people who do real work to enrich these people will have to work longer. That means they will have a shorter and less healthy retirement.
Now, I am guessing about 40% of people in the US will never be able to retire. I know a couple in that situation right now.
The GOP has been trying to kill of Social Security for almost 50 years, I fully expect they will succeed in 10 years or so.
The peeling off of some of the more recent layers that have been applied, made possible due to the abundances provided to western society by its ownership of the advanced industrialisation and information ages.
The debt has been growing for 50 years, has life gotten worse during those 50 years?
What happens if we don't pay off the debt?
The US is currently at $1T+ a year in tax revenues that instantly go right out the door toward paying bond interest. It will likely be $2T within 10 years, even fewer if rates don't come down in that time. It's compounding and therefore exponential.
Situations like Japan are even more dire. A small increase in the interest rate results in a HUGE increase in interest expense at 260% debt to GDP ratios. Worse, their population is naturally shrinking a million people a year on account of their decades-long birth rate implosion. Hard to outgrow that.
I live in a rural community filled with farmers and FiFo workers (fly in | fly out mine and rig workers) with a median age of ~ 60 years.
My father has worked hard manual labour his entire life, he only recently stopped splitting wood and climbing ladders. He was born in 1935.
He's not unusual here, many 60 and 70 year olds, 80 year olds even, are still active on the land here.
Rephrased, it's just as problematic, albeit with a kernel of truthiness:
Clearly some of us are still fully capable of doing manual labour at 67 but those who have spent their lives doing software "engineering" have usually accumulated some significant mental burn out by that age. They need a break.Given that, software work at 67 should be well within cognitive limits.
(I'm actually not sure if I'm being sarcastic)
It's not just the age at which the government lets you claim OASDI and Medicare. It's also the fact that in the US at least, we've basically set up the entire economy around the idea of paying retirement/pension funds first and foremost, C-suites second, and the people creating the actual value third.
In the most recent bill, the rules for writing off private jets changed such that you can take the entire write-off in one year instead of over the life of the plane. This alone is set to cost hundreds of billions of dollars [1].
Of the ~433T in debt over the entire life of the US, ~$8T of that came from Trump's first term [2].
Some people physically break their bodies and risk their lives doing necessary but relatively low-paid work. But telling baggage handlers, construction workers, agricultural workers, firemen, commeercial fishermen and agricultural workers that they need to work to 70 instead of 65 so the debt doesn't balloon while allowing Jeff Bezos a much bigger tax break in buying his 3rd private jet is utterly bananas.
[1]: https://inequality.org/article/the-big-beautiful-bill-would-...
[2]: https://www.crfb.org/blogs/how-much-did-president-trump-add-...
There is, though.
The 60+ year-olds wanting to retire spent the last four-to-six decades racking up a metric crapload of public and private debt. Not only did they spend a lot, they seriously weakened the ability for revenues to cover said debts. Severe bureaucratic handicapping of revenue agencies, means that an estimated hundreds of billions of dollars in tax go uncollected every year in the United States alone [1]. Imagine what the federal deficit looks like if the US had to borrow a few hundred billion less each year. It's far from zero, but it's better than it looks now.
Retirement isn't a right, it's a math problem. For most of human history, if you lived long enough to get too old to do labor, you were expected to do something (usually helping with childrearing or teaching skills to younger generations) in order to lessen the burden of your existence to others, mainly your family. Now that most labor isn't actually physical and people are living longer, there's less excuse for doing nothing for 10+ years off of savings besides just wanting to. Unfortunately, given the size of deficits in lots of Western nations and the stagnating wages of the younger generations, those retirement accounts are becoming more attractive as a way to pay off debt that the people holding those accounts created.
[1] https://www.pgpf.org/article/the-united-states-forgoes-hundr...
Society decides what people's rights are. Why should we not decide that retirement is a right?
The wealthy not paying a wealth tax is not a right.
The problem with retirement schemes today is that most people’s savings are not enough to pay for their retirement so the younger generations need to chip in.
I would want to think hard about the second-order effects of preventing transmission of regular school colds & flus before trying to suppress them, which would be that people would miss out on training their immune systems while they are young & resilient.
It would be nice to get sick less often and environmental suppression in schools seems like such an obvious win... but I don't have enough understanding to know if it would really be a good thing one way or the other.
As amount of pensioners grow, their political power does too and their interest in future of the country is about zero. Why should they care, it is not their future.
Some people might plan to work until the day they drop, which is obviously a laudable goal. It's good to contribute to the economy.
Others may purchase an annuity for a target date years or decades in the future, which pay out in basically the same way as social security tends to.
Some (maybe most) would just save more for retirement, because they know if they don't no one will.
Realistically I suspect most people would hedge their bets dynamically go for a combination of these things. Which isn't all that different from the current system, where SS despite being over 20% of the federal budget is considered by most to be woefully inadequate even in the current day for a retirement plan.
We could shuffle some numbers around with fiscal, monetary and labour policies in ways that would result in far more wealth flowing from the old to the young, rather than from the young to the old as is happening now, and it would still be true that “people earned their savings and can spend it how they see fit”.
As for the younger generations, they have even less wealth than those of retirement age. Why should they chip in?
https://data.worldbank.org/indicator/SI.POV.GINI?end=2023&lo...
Top-end compensation has gone through the roof compared to "regular" worker compensation since we started cutting tax rates on the rich. And we also have no shortage of deductions and shelters today either.
So why shouldn't we raise the rates back to at least reduce the consolidation and government revenue trends that have happened since we lowered them?
Here's one quick source that 5 seconds on Google turned up - https://city-countyobserver.com/did-people-really-pay-91-tax... - estimates suggest that top earners in the 50s payed a 42-45% effective tax rate vs today's 26-28% effective tax rate. That's a pretty giant difference! Interestingly, despite that, the top 1% paid a bit smaller of a fraction of total tax income (30-35% vs 40% today) suggesting that it may have helped spread the money around so that the 2-5%, 5-15%, etc parts of the population were relatively better off compared to the top 1%. Less of the top 1% hitting the top marginal rate suggests that it's a rather useful incentive for keeping your salaries less obscene.
Quite an assumption on your part.
Despite having serious mathematical qualifications and several million SLOC of code behind me, I've also worked cattle stations, mine sites, and been part of SES and St. John's Ambulance crews (first responders to accidents).
That said, to address your question,
he's not worked with either Aaron Swartz nor Terry Davis.
At that point it's going to have to be considered that a 60 year old is still perfectly capable of working low physical demand jobs rather than spending 10-30 years on cruise ships.
US corporate profits are around $4 trillion a year [2].
I view that $4T as the exploitation of surplus labor value. Put another way: it wouldn't exist if it wasn't for labor. A mere 10% of that would make a significant difference to Social Security.
As for your contention that a 60 year old is capable of working. Doing what? The prospects are already dire for people who are laid off in their 50s. You want them to be cashiers at Safeway at minimum wage? Minimum wage isn't even a living wage.
Many of these people have done physically demanding but completely necessary jobs their entire lives. Their bodies can be wrecked.
I don't know your circumstances but generally speaking I see a lot of "tech-hubris" on HN. People who skew younger and are very privileged to work in tech. The hubris part is being young, many think this will go on forever. The reality is ageism is rampant in tech. The other part is thinking you won't be impacted by automation (and AI).
Will you be bagging groceries until you're 67-69 because Amazon made an AI that now does your job?
[1]: https://www.ssa.gov/oact/progdata/assets.html
[2]: https://ycharts.com/indicators/us_corporate_profits_quarterl...
Not to speak for the other commenter, but if you want to see some real change in people's voting patterns, do exactly that.
As far as their bodies being wrecked, well, that's the actual intention of OASDI, more popularly known as Social Security. Old Age, Survivors, and Disability Insurance. If we stopped giving out checks to people just for getting to 65, we might be able to preserve that safety for future generations. After all, it's in the name: insurance. You don't get to collect any other sort of insurance just for being alive past a certain time, because that would make that insurance fund unsustainable.
Certainly not all 60 year olds, but plenty of 60 year olds are still actively working in trades. There is a massive gap between, say, doing the building and installing of carpentry related things, and being a grocery store greeter.
It not unreasonable for people to take on a more teaching side of their job and doing much less of the heavy lifting parts. Being in a position to pass on knowledge and technique to the next generation is probably the best things for society and even for many of the individuals as a sense of purpose. The majority of the people I know around me don't know what to do with themselves when they aren't working, so still having something to do isn't a bad thing to them. They just don't want to keep working 40 hours a week to live paycheck to paycheck.
But that's not going to do enough. The Boomers didn't have enough kids, and the ones that they did have face stagnant wages and international competition for jobs.
From my limited understanding the government hasn't been responsibly saving and investing social security withholdings your whole life in a special account for you that invests in index funds and is sitting there for you when you retire.
Instead it works something kinda like a ponzi scheme meets an insurance company. They keep a float of cash that's enough to pay out, and then put the money to use for all sorts of government costs because they won't need it for 30 years. Which works fine until the 30 years is up and they don't have it…
Probably won't happen I assume, they'd probably just print money to pay it back in an inflationary move but regardless — it's a risk that is not the same as every other risk.
false.
you are neglecting economic growth which increases tax receipts but does not increase the debt.
if government expenditure grows faster than economic growth, yes, bankruptcy is in the future.
Who am I kidding. The current administration showed us--what was it? last week?--that they prefer cutting taxes for the wealthy and increasing the deficit.
Republicans ALWAYS increase the deficit. Democrats usually do, but not always.
It looks like we'll probably let the generation that created this mess retire like normal, and instead try to fix it by making their children and grandchildren work until death.
One company alone— Berkshire Hathaway— paid almost $27 Billion in taxes for 2024. That’s about 5% of all corporate taxes paid.
To really make money, you have to tax a bunch of smaller fish, not a handful of bigger fish. You need big numbers.
That’s politically unpalatable, especially for Republicans. ( Though Democrats seem to have no appetite for it either. )
In the past, Republicans would cut taxes ( popular ) while not spending as much ( unpopular ). Democrats would not cut taxes ( unpopular ) while spending more ( popular ).
Sadly, today both parties are acting like undisciplined parents. Everybody wants to give out the treats ( spend big ) while nobody wants to earn the paycheck ( raise the taxes ). It’s a bipartisan formula for disaster.
Yes. This means that if we double the taxes on the wealthy we will roughly double our total taxes collected. A neat trick.
It's true that the top 50% pay 97% of taxes, but that's not the slam dunk you think it is, because the top 50% have 97.5% of the wealth (see sources).
Your suggestion to tax the poor is stupid, because the poor have nothing more to give. Even if we could extract 10x the amount of taxes from the poor, it would barely be a blip. If the bottom 50% paid 10x the taxes, then they'd be contributing, what, like 15% of all taxes? We're going to take from the poor, take food out of their mouths, for 15% more taxes? Like I said before, its like trying to squeeze blood from a stone, there's just nothing there to squeeze.
https://taxfoundation.org/data/all/federal/latest-federal-in... https://usafacts.org/articles/who-owns-american-wealth/
Or are you saying the Trump tax cuts never benefited the wealthy at all?
QSBS is capped, and the SALT deduction goes away with increasing MAGI. They're targeted at the upper middle class, not the wealthy.
The "S" in QSBS stands for "Small" business.
The previous limits were fixed, and this change seems to be adjusting it for inflation. It's been around since 1993. An inflation adjustment is not a "cut".
Even so, as I'm sure you're aware, these two items are not what people mean by "tax cuts for the wealthy". If you ask anyone (other than a tax accountant) what a QSBS deduction is, you'll get a blank stare.
Things like QSBS and carried interest are absolutely part of what people mean by "tax cuts for the wealthy".
No they aren't. Nobody mentions them on the news/editorials, nobody's heard of them but you and I. What people meant is the marginal tax rate.
I am not a tax accountant, and never heard of them before your mention. I spent some time googling it, and it looks like the limits were adjusted for inflation.
Of course. It's disingenuous to claim that not raising taxes is a "cut".
It's the same lie as claiming a reduction in a spending increase is a "budget cut".
There are actual tax cuts in Trump's bill, but they don't apply to the wealthy.
It's not a "cut", it's just that the BBB makes taxes lower for the wealthy than they would have been without the BBB <eyeroll>.
As a business, you can deduct VAT that you had to pay to others from the VAT you charged your customers, and you only pay the difference.
So the only people who end up paying are the final consumers. It is essentially cost neutral to a business - you just have to account for it properly.
UPDATE: in the UK, at least.
Snark aside. I've always heard the idea was that free markets and competition would drive down prices, and that if a company was to just raise their prices, they would actually lose money because people would buy from a competitor with better prices. Turns out companies can just raise prices though. What does it mean when the things that happen in a healthy free market aren't happening?
Well, when they have a monopoly, yes, yes they can.
> Is that free market competition in action?
No.
no, you won't, people change their financial decisions in the face of taxes. increasing taxes will slow the economy, bringing in a change of party in the whitehouse and congress, and taxes will be lowered again. high taxes don't work, and people don't like them.
>It's true that the top 50% pay 97% of taxes, but that's not the slam dunk you think it is, because the top 50% have 97.5% of the wealth (see sources).
taxes are on income, not wealth. the reason those percentage numbers and the wealth numbers come out the same is because poor people pay small or zero tax so it's as if their income is not counted
higher taxes on the wealthy will not benefit the poor, their taxes don't get lowered. However slowing the economy does hurt the poor
Instead of taxing income or spending, tax wealth. Will the wealthy make themselves less wealthy in order to avoid a wealth tax? I don't think so. Tax the top 1%; even with a wealth tax they'll still be able to afford multiple homes and a yacht--hell, there are people who can afford two homes and a yacht and don't even fall in the top 1%, so people will still be able to have plenty without ever actually paying a wealth tax.
Like one person I know is a German citizen living and working in the USA with a permanent resident visa, and she owns some forestry land in Canada. Should that land be subject to a wealth tax and if so how would you value it? Does the IRS then need to hire an army of bureaucrats to calculate valuations on those assets?
a wealth tax of 1% reduces the return on the stock market for that year to 6%, but it compounds onto follow-on years; if you "wealth tax" every year, that effectively lowers the return on the market very dramatically. If the returns on the stock market are lowered dramatically, you will see a huge slowdown in the economy.
the point of this is, there isn't really such a thing as a "wealth tax", it's just a "multiplied income tax". it might be different in your head, but you're wrong, it's not different in reality. you are welcome for the free education.
the question is, why is the only thing you can think of "take money from people who have it". that's a zero sum game, no wealth creation. What makes market economies so wonderful to live in is their wealth creation.
Why does Elon have so much money? wealth creation. Here's why: without Tesla, the roads would not be empty of cars, people would just buy different cars. There are other car companies, GM, Ford, Nissan, Honda, Volkswagen, etc.
Tesla is not taking your money. Tesla is offering an alternative car to buy with your money. With no Tesla, you would plunk your money down on one of those other brands, but if you like Tesla's better, you buy one of those. That creates happiness, you are happier spending your money on a Tesla than on the alternatives. That's the money that Elon is collecting, GM's money and some extra for your excitement/satisfaction. And he deserves it because he created it and you are happy that he did. You would not be richer without Tesla. You would buy a different brand, and be out the same amount of money, and enjoy your car less. So when you think "we need to take Elon's money" you are essentially saying "I wish Elon didn't exist and I want the crappy Nissan for less money". That's a spiral into the ground because the other company's don't put as much value into their cars as Tesla and if you paid them less, they'd produce less.
If your response to this is "I would never buy a Tesla, I don't even like them", then I will just shake my head sadly at your inability to learn even more.
I suggested a wealth tax only on the top 1%. (Or on the top 0.1% might work better, the specific number isn't the main point.)
The top 1% didn't get there through average stock returns, so the stock arguments are not applicable. Most stock participants would not have a wealth tax.
One of the major themes of this entire thread is that retirement age will have to be raised, with some even saying that any retirement at all is unusual and unsustainable. So do please tell me more about market economics and their wealth creation. Why are we regressing in our market economy? What does it mean when the things that happen in a successful market economy aren't happening?
As for Elon. Even with my proposed wealth tax, he would still be the world richest man. Especially if he continues to run successful businesses. A wealth tax doesn't immediately erase all the wealth of those it applies to.
You're wrong that nobody's heard of these things and that they aren't in the news. Pick up the NYT or Fortune or any moderately substantive source. These issues have been discussed all over for decades, and they came up again repeatedly in the context of the BBB. QSBS and SALT came up because of their expansions, and carried interest came up because Trump promised to eliminate it but didn't. I didn't go digging for this information. It was handed to me.
More importantly you're wrong that people only think of tax cuts in terms of marginal rates, and that they need to know about specific schemes like QSBS and carried interest to include them in the broader idea of tax cuts for the wealthy. People have a general awareness that such schemes (popularly: "loopholes") exist and benefit the wealthy. The names of the schemes and how each one works don't matter. People know they exist and what they amount to.
So: The idea that people don't know about specific tax schemes used by the wealthy, and therefore don't think of these schemes as tax cuts for the wealthy, is wrong, and the idea that people need to know about specific tax schemes used by the wealthy in order to think of those schemes as tax cuts for the wealthy is also wrong. The first is wrong empirically, and the second is wrong logically.
> you're wrong that people only think of tax cuts in terms of marginal rates
No evidence for your case, other than a vague notion of "loopholes".
Besides, there is no requirement for wealth in order to invest in a QSBS.
As for SALT, it starts getting phased out at $500,000 and goes to zero at $1m.