Work till you drop .
Andre Willers.
29 Jul 2014
Synopsis:
If pension funding is kept the same as at present , then the
general retirement age would have to be about at age 75 .
Discussion :
1.The government retirement basis was mainly set up in 1930
. See Appendix A
2.The retirement ages remained the same . Little change was
made in reserve provisions due to political unwillingness to raise taxes as
life-expectancy increased .
3.The result is a huge pension shortfall , now coming home
to roost as baby-boomers begin to retire .
4.Raising the retirement age is being done .
5.We calculate the retirement ages for the same mortality as
at 1930 .
See Appendix C and Appendix B.
6. New Retirement ages .
Male future retirement 2010 - 2100
Age increases from 73 to 81, with life expectancy at 11
years essentially the same as in 1930 .
Female future retirement 2010 - 2100
Age increases from 71 to 78, with life expectancy at 14
years two years less than in 1930 .
7.Doing the same using persons alive at the retirement
age(Tx) (an indicator of reserves required) , gives the same approximate result
.
Comparing Tx of 1930 with 2010 figures indicates that the
2010 pensions would only be 45% funded .
(45=100/2.2)
Moody’s Estimate in 2013 is 48% . See
“The report, released today, examined pensions
in every state and found that the total funded ratio, which measures assets
relative to liabilities, fell to 48 percent under its new methodology from 74
percent before the changes. The ratio measures fund management and whether a
state is keeping up with promises to retirees.”
8.Great social instability results .
Retirees are abruptly poorer , as well as a charge on the
fiscus .
As GINI rises , the new aristocracy and oligarchs consume
more resources at the expense of the erstwhile middle-classes .
9.Choices :
9.1 Work till you drop . (Extend retirement age till 75)
9.2 Revolution . (Take from the rich)
9.3 War . (Take from other countries)
9.4 General assisted euthanasia .(Reduce population and
old/sick/poor)
9.5 Famine and plague .(The result of overpopulation )
9.6 Everybody grows super-rich (ie Singularity) .
Once a real possibility , but increasingly remote as human
greed erodes the future .
It seems that this option is being pre-empted by oligarchs.
This attractor can be eco-stable in the ancient Egyptian
sense : Small Hi-tech eco-aristocracy and a large low-tech serf class, with
some mobility between classes .
Some countries are already nearly there .
Humans should have stuck with what they could handle : a
Neolithic fishing village .
Curmudgeonly yours
Andre
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Appendix A
The Origins of the
Retirement Age in Social Security
By the time America
moved to social insurance in 1935 the German system was using age 65 as its
retirement age. But this was not the major influence on the Committee on
Economic Security (CES) when it proposed age 65 as the retirement age under
Social Security. This decision was not based on any philosophical principle or
European precedent. It was, in fact, primarily pragmatic, and stemmed from two
sources. One was a general observation about prevailing retirement ages in the
few private pension systems in existence at the time and, more importantly, the
30 state old-age pension systems then in operation. Roughly half of the state
pension systems used age 65 as the retirement age and half used age 70. The new
federal Railroad Retirement System passed by Congress earlier in 1934, also
used age 65 as its retirement age. Taking all this into account, the CES planners
made a rough judgment that age 65 was probably more reasonable than age 70.
This judgment was then confirmed by the actuarial studies. The studies showed
that using age 65 produced a manageable system that could easily be made
self-sustaining with only modest levels of payroll taxation. So these two
factors, a kind of pragmatic judgment about prevailing retirement standards and
the favorable actuarial outcome of using age 65, combined to be the real basis
on which age 65 was chosen as the age for retirement under Social Security.
With all due respect to Chancellor Bismarck, he had nothing to do with it.
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Appendix B
Definition of terms
q(x) is the probability that a life aged exactly x will die
in the next year ie, before attaining exact age x+1
e(x)
Life expectancy is the expected (in the statistical sense)
number of years of life remaining at a given age.[1] It is denoted by e_x,[a]
which means the average number of subsequent years of life for someone now aged
x, according to a particular mortality experience. Because life expectancy is
an average, a particular person may well die many years before or many years
after their "expected" survival. The term "maximum life
span" has a quite different meaning. The "median life span" is
also a different concept although fairly similar to life expectancy numerically
in most developed countries.
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Appendix C
Finding new expected retirement ages in 21st
century using same reserve requirements as 1930 .
|
Mortality
tables
|
||||||||
|
Find
future age with same mortality as 1930 mortality .
|
||||||||
|
Old
Retirement Ages with mortality and life expectancy
|
||||||||
|
Male
|
Female
|
|||||||
|
Year
|
Age
|
Mortality
|
Life Exp
|
Retire
|
Age
|
Mortality
|
Life Exp
|
Retire
|
|
x
|
q(x)
|
e(x)
|
x
|
q(x)
|
e(x)
|
|||
|
1900
|
65
|
0.041585
|
11.35
|
60
|
0.026266
|
14.96
|
||
|
1910
|
65
|
0.041512
|
11.38
|
60
|
0.024240
|
15.16
|
||
|
1920
|
65
|
0.037141
|
11.81
|
60
|
0.022675
|
15.48
|
||
|
1930
|
65
|
0.039454
|
11.83
|
Retire
|
60
|
0.021874
|
16.04
|
Retire
|
|
1940
|
65
|
0.038116
|
11.92
|
60
|
0.038113
|
16.78
|
||
|
New
Retirement Ages with estimated mortality and life expectancy
|
||||||||
|
Male
|
Female
|
|||||||
|
Year
|
Age
|
Mortality
|
Life Exp
|
Retire
|
Age
|
Mortality
|
Life Exp
|
Retire
|
|
x
|
q(x)
|
e(x)
|
x
|
q(x)
|
e(x)
|
|||
|
2010
|
73
|
0.036823
|
11.26
|
Retire
|
71
|
0.020745
|
14.99
|
Retire
|
|
2010
|
74
|
0.039951
|
10.67
|
72
|
0.022548
|
14.30
|
||
|
2020
|
74
|
0.036556
|
11.17
|
Retire
|
72
|
0.020818
|
14.84
|
Retire
|
|
2020
|
75
|
0.039864
|
10.57
|
73
|
0.022617
|
14.15
|
||
|
2100
|
81
|
0.039454
|
10.12
|
Retire
|
78
|
0.020648
|
14.19
|
Retire
|
|
2100
|
82
|
0.044491
|
9.51
|
79
|
0.022264
|
13.48
|
||
|
New
Retirement Ages with life expectancy
|
||||||||
|
Male
|
Female
|
|||||||
|
Year
|
Age
|
Life Exp
|
Age
|
Life Exp
|
||||
|
2010
|
73
|
11
|
71
|
14
|
||||
|
2020
|
74
|
11
|
72
|
14
|
||||
|
2100
|
81
|
10
|
78
|
14
|
||||
|
Male
future retirement 2010 - 2100
|
||||||||
|
Age
increases from 73 to 81, with life expectancy at 11 years essentially the
same as in 1930 .
|
||||||||
|
Female
future retirement 2010 - 2100
|
||||||||
|
Age
increases from 71 to 78, with life expectancy at 14 years two years less than
in 1930 .
|
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|
Reserves
for retirement using 1930 standards would then be adequate .
|
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|
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