Study supports delaying retirement

WASHINGTON — Can Americans work longer? Or, are we so broken down by our 60s that extending work life would be cruel? These questions stalk the debate over Social Security and Medicare. Critics of current policy, including me, have long urged that eligibility ages slowly rise to reflect longer life expectancy. Not so fast, counter others. Just because people live longer doesn’t mean they can — or should — work longer.

We now have a new study that confronts the question. The answer: an emphatic yes. “Most people are healthy enough to work longer than they do now,” write economists Courtney Coile of Wellesley College, Kevin Milligan of the University of British Columbia and David Wise of Harvard. Most Americans could work another two to four years without adverse consequences, they say.

That would move the current eligibility age for full benefits from today’s 66 to somewhere between 68 and 70. Presumably, the increase would be phased in to give people time to adjust. (The full eligibility age is already scheduled to increase slowly to 67 by the end of the next decade.)

Of course, health issues alone won’t settle the issue. Millions of Americans regard a lengthy retirement as something they’ve been promised. They don’t want it cut, even if life expectancy has increased. (At birth, U.S. life expectancy is now 79 years, up from 70 years in 1960.) Their position is that Social Security spending should automatically increase to cover longer retirements. They also argue that the poor — being less healthy than wealthier workers — would be hit hardest by higher eligibility ages.

How do the economists conclude that most Americans could work a few years longer?

One way would be to define “good health” as the absence of some conditions (say, diabetes) and the presence of others (say, proper weight). The economists sensibly didn’t do this. It would have opened an endless technical debate over the definition of “good health,” with defenders of today’s eligibility ages advocating an exacting definition and opponents embracing looser standards.

Instead, the economists took a simpler approach. For most of the last century, Americans’ health has slowly improved. Mortality rates — the share of the population that dies at a given age — have dropped. The result is, for example, that the mortality rates for today’s 55-year-old men equal rates for men who were 49 in 1977. Suppose, ask the economists, today’s 55-year-olds worked in the same proportion as the 49-year-olds in 1977. Eighty-nine percent would be working now, as opposed to the 72 percent of 55-year-old men who actually work.

The study performs similar estimates along the 55- to 69-year-old age spectrum. In 2010, 37 percent of 65-year-old men worked; the rate would have been 77 percent if the 65-year-olds had worked in similar proportions as men in 1977 with the same death rates. The assumption is that people with the same death rates have roughly the same health and are equally capable of working.

But because this is not necessarily so, the study performs a similar exercise on people’s evaluations of their own health — are they in good, fair or poor health? — and their ability to handle “activities of daily living”; these include dressing, bathing, walking across a room. Arguably, these detailed measures of health more directly affect the capacity to work. Again, the same relationship holds: Older people today seem as healthy as people who were several years younger a few decades ago. So why shouldn’t they work the same way, too?

What’s confusing is that — quite obviously — older people are less healthy than younger people. The catch is that they’re getting less healthy at a slower rate: Today’s older Americans are healthier than yesterday’s older Americans. What, if anything, should we do about that?

The economists don’t make a specific policy proposal. They concede that even a gradual increase in Social Security’s eligibility age would fall hardest on the poor, who have shorter life expectancies. They also note that older workers face possible job discrimination and that any change in the eligibility age relates to the larger issue of how much the government should support retirement. They simply “intend for our analysis to contribute to the discussion about relatively modest changes to Social Security.”

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