Thursday, December 30, 2004

AARP's Place at the Table

AARP is planning to greet the new Congress with a two-week, $5 million ad campaign featuring a "Social Insecurity" theme, according to the NY Times. The spots will feature people (a Harry-and-Louise-ish couple, an options trader and others) saying they don't want to gamble with their retirement. A number of bloggers, including Matthew Yglesias and Mark A. R. Kleiman see this as a good thing.

What is not explained by either the Times or the two bloggers is why AARP should have a strong voice in the debate. Those it represents will be uneffected by the likely reforms (even Bush has stated private accounts would be limited to workers who are younger than the AARP membership).

It sounds as though AARP itself has latched onto "retirement" as its core issue, even if the issue at hand has no direct impact on its current members.

What is lacking in this debate are organized voices from those who would be directly affected by the proposed reforms, namely Gen X and Gen Y for lack of better terms. AARP does not speak for them even if it would like to.

Is There a Social Security Crisis?

George Bush has raised the spector of Social Security reform and sparked a debate about whether the system is in crisis at all. Those arguing that there is no crisis (and thus no need for reform) often point out that the system will not go bust before 2042. Even then, they say, the promises made under the system can be met with slight tweaks (see the Detroit Free Press for an example of the argument in the second answer). So, does this mean there is no imminent crisis? After all, 2042 is a long way off, right?

Perhaps not.

I am hoping, fingers crossed, to start collecting benefits when I turn 67 in 2034 (yes, I was born in 1967). What does the preceding statement mean to the debate?
  1. My retirement age for benefits has already been changed once -- to 67 from 65. For me, this change happened in one fell swoop in 1983, not gradually over time as government officials still insist (see the Brookings Institute for a list of all changes to the system since its inception). Listening to some in the debate I have a sense that the promise that I will be able to retire at 67 will not be kept and yet I am nearly half way through my working career. That sounds like a crisis to me.

  2. Pension benefit promises covering the years from my retirement in 2034 to my eventual death (this actuarial table says it will likely occur by 2046) have been made to me since I entered the workforce in 1986. That means promises are today being made to me for at least four year past the point at which those making them know they can be kept. That sounds like a crisis for me.

  3. I am 37. There are many, many youger workers who are now making payments in the system who will retire well beyond the point at which the promises cannot be kept. An eighteen year old starting her first job today will pay more than 12 percent of what are in all liklihood small checks and not collect her first check before 2043 ... wait, that is one year past the current crisis date. How can we be making promises to her knowing they can't be kept. That sounds like a crisis to me.

  4. Currently I pay 12.4 percent of my income into Social Security. In my case that works out to about $650 per month. To put that amount in perspective, Social Security is a larger expense than any others I have besides rent and taxes. It is more than I spend on food and far more than I am able to save. That sounds like a crisis to me.
Comments anyone?