Lloyd Blankfein, the 57-year-old CEO of Goldman Sachs, who was paid more than $16 million dollars last year, appeared on CBS last night to talk about the fiscal cliff and lay some truth on the American people: You all need to work longer.
You can look at history of these things, and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career. … So there will be things that, you know, the retirement age has to be changed, maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained.
As Ezra Klein and others before me have noted, it is very easy for someone to tell Americans to work longer when his retirement involves fuzzy visions of philanthropic work and occasional appearances as an elder statesman on CNBC. Same goes for senators who would prefer to croak while prattling on during a floor speech and for national journalists who intend to keep writing until they finally go blind from staring at a monitor. They like their jobs. They don’t want to leave them.
However, it might not be so easy for your average American, particularly one with a numbingly repetitive or physically taxing occupation, to work those extra years.
It turns out that raising the retirement age is also one of the more regressive ways to cut benefits. That’s because the more Americans make, the longer they live. The less they make, the shorter they live. Over the past thirty years, almost all of the gains in life expectancy among men at age 65 have gone to the top half of earners, as shown in this graph courtesy of the Incidental Economist:
There are dozens of approaches available to us for fixing Social Security’s long-term funding shortfall that wouldn’t disproportionately strike the low-income, such as changing the formula for cost of living adjustments, reducing benefits for particularly high earners, or changing the cap on taxable income. There’s no reason why we should pick one that places most of the burden on, say, the guy who works behind the butcher counter at your local grocery store instead of Lloyd Blankfein.