Saving Social Security by Lowering Life Expectancy

Today brings new affirmation of our thesis about “the awful way Social Security might be ‘saved.’”

As was laid out 18 months ago in The Daily Reckoning, and before that in the former Apogee Advisory: Aging, well-educated high earners are staying in the workforce longer and contributing to the system. Meanwhile, less-educated low earners are dying off before they can collect much, if anything, from the system.

Now comes word from the National Center for Health Statistics that U.S. life expectancy has fallen for the first time in more than two decades — from 78.9 years to 78.8. It’s the first drop since HIV and AIDS took their heaviest toll in 1993. And it comes after the number had plateaued the preceding three years. The steady increase in U.S. life expectancy going back to the 1970s appears to be over.

The decrease can be attributed in part to a 0.9% increase in the death rate from heart disease — also a reversal after decades of gains going back to the ’70s. The increase in obesity since the 1980s is catching up with medical progress.

[Alas, the researchers didn’t go the next step and point out what we did in 2014: The increase in obesity began at the same time the government issued its first Dietary Guidelines for Americans — demonizing saturated fat and promoting carbohydrates. Oh, well…]

Significantly, the researchers also say more people are dying younger. “Old-age mortality has not changed that much, but there’s been pronounced increases in mortality in the middle ages,” says Elizabeth Arias, one of the report’s authors.

That jibes with research we cited a year ago from Princeton University — showing the death rate exploding between 1999–2014 among middle-age white Americans with no more than a high-school education. There, the causes are largely suicides and substance abuse.

Grim as it sounds, we’re talking about many people who might’ve paid payroll taxes for 20 or 30 years… but won’t collect a penny of old-age benefits.

Meanwhile, we see Drudge linking to a story about the British government recommending that people delay or forego retirement if they want to live longer.

“People are living longer than ever and so retirement presents a real opportunity for baby boomers to be more active than ever before,” says Dr. Sally Davies, who’s the U.K.’s equivalent of the surgeon general. “Staying in work, volunteering or joining a community group can make sure people stay physically and mentally active for longer,” she tells The Guardian. “The health benefits of this should not be underestimated.”

At 67, Davies is eating her own cooking by staying in the workforce… and that’s to her credit. But her situation reminds us of a statistic we dug up for our original article: Nearly two-thirds of American men with a professional degree ages 62–74 are still working. Not all of them are working full time… but nearly all of them are paying payroll taxes.

Hmmm… At the rate we’re going, it’s possible Social Security’s insolvency date — officially 2033, but more likely 2026 — could start being pushed back. As we say, it’s an awful way to “save” Social Security.


Dave Gonigam
for The 5 Min. Forecast

The Daily Reckoning