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Retirement Planning > Retirement Investing

Republican plans to raise retirement age fall heavily on poor

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(Bloomberg) — Republican presidential candidates’ rationale for raising the retirement age, that we’re all living longer, holds true for those with multiple diplomas, homes in safe neighborhoods and a plan for golden-age leisure. In other words, for the wealthy.

For the poor, research shows that as incomes have stagnated, so have life expectancies.

Candidates Chris Christie, Ben Carson, Jeb Bush and Marco Rubio all support raising the age. Democrats tend to oppose their premise that Social Security is in crisis, and that working longer is a fair way to fix it.

Lifting the age from 67, an idea pushed for years to bolster Social Security, would affect Americans in dramatically different ways depending on their wealth. Forcing the poor, who die younger, to work longer threatens to make a lengthy retirement a perk reserved only for the prosperous.

“If we increase the working age in order to mend Social Security, people will be punished in places where life expectancy is very low,” said Ali Mokdad, a health professor at the University of Washington in Seattle. “This is another policy where the rich will benefit more than the poor.”

Nowhere is the disparity more apparent than in Virginia, which has the widest life-expectancy gap of any U.S. state, according to data collected by Mokdad and colleagues.

In wealthy Fairfax County, just outside Washington, the average woman can expect to celebrate her 84th birthday, and men their 81st. Travel 130 miles (210 kilometers) south to Petersburg, a poor, majority-black city near Richmond, and those figures plummet by 11 years for women and 14 for men.

Futures Envisioned

At a Fairfax County Public Library branch in Falls Church, 34 new and soon-to-be retirees gathered recently for an AARP workshop called “Life Reimagined,” meant to fashion a post-work existence of travel, mission work, new hobbies or sports.

“That’s the beginning of our next life, not the end,” moderator Sally Cooney Anderson told attendees.

Beth Irons, 68, said she still works in real estate because she enjoys it. She wants to cut back while maintaining a lifestyle that includes a seaside Maryland cottage and a coming month-long African safari.

“I want to travel to more countries,” she said.

In Petersburg, post-work lives are circumscribed.

John Ferby, 65, began drawing government benefits in August after a lifetime of manual labor, which included stints in a chicken plant and as a silo inspector. He subsists on monthly payments of $432 from Social Security and $114 in food stamps.

“A lot of people don’t realize you don’t have to eat every day,” said Ferby, as he sat on a friend’s porch.

Life expectancy has been rising in the aggregate. It’s about 79 for the average American, almost a decade longer than in 1960, according to the Centers for Disease Control and Prevention.

Dying Poor

Those gains accrued mostly to the affluent. In 2010, a 50- year-old man in the poorest quintile could expect to die 13 years earlier than his counterpart in the richest, according to a report last month by the National Academies of Sciences, Engineering and Medicine. In 1980, the difference was just five years.

Life expectancy for the least educated white people (education is often used as a proxy for income) has actually fallen since 1990, according to a 2012 study by the journal Health Affairs.

Social Security, which set retirement at 65 when enacted as a cornerstone of President Franklin Roosevelt’s New Deal, is credited with eradicating widespread poverty among the elderly.

The 1935 program was intended to help the poor by returning a higher proportion of their income. The life-expectancy gap erodes that advantage, because the rich draw payments longer, according to the Congressional Budget Office.

In 1983, Congress voted to gradually raise the retirement age on the recommendation of a panel convened by President Ronald Reagan. The current age to retire with full benefits is 66; those born after 1960 can stop working at 67.

Among Republican candidates, Christie’s plan is the most detailed, calling for boosting the age to 69 in annual increments of two months starting in 2022. Benefits would be eliminated for the wealthiest.

“There is no legitimate analysis of the long-term Social Security solvency crisis that doesn’t point to increased life expectancy as part of the cause,” said Samantha Smith, a campaign spokeswoman. Christie also would end the payroll levy for workers older than 62, which would “disproportionately benefit lower-income workers,” she said.

Worked Out

Alberta Ogburn, 64, doesn’t know what she would have done had she been unable to take earlyretirement this year after leg problems ended her 26-year run as a housekeeper.

“I was having a problem getting up from the floor,” said Ogburn, who helps support her daughter and two grandchildren in Petersburg.

Raising the retirement age is a way to cut benefits for those who need them most, said Teresa Ghilarducci, a labor economist at New York’s New School for Social Research who advises Democratic frontrunner Hillary Clinton.

Clinton has yet to stake out a position on retirement age during this campaign. In 2007, she said raising it was unacceptable. Democratic rivals Bernie Sanders and Martin O’Malley favor boosting Social Security benefits and leaving the age alone.

Among Republicans, Carly Fiorina has said change is needed to preserve Social Security but hasn’t given specifics, and frontrunner Donald Trump has called cutting the program unfair.

Regardless of equity, Virginia’s truncated life spans come at a cost to all: the equivalent of 1.9 percent of gross domestic product, according to a 2012 Health Department report.

Had all residents the same mortality as those in the five most affluent counties, more than 24 percent of deaths between 1990 and 2006 would have been averted, the report said. That’s almost 12,000 deaths per year.

“Your zip code is your pre-existing condition,” said Adrienne McFadden, a physician who directs the department’s Office of Minority Health and Health Equity.

In Petersburg, 27 percent of the 33,000 residents live in poverty, more than double the state average. Smoking and obesity are among Virginia’s highest, according to the Institute for Health Metrics and Evaluation, a research center at the University of Washington.

Duran Chavis, a 35-year-old community organizer, is trying to extend lives by selling produce from a new indoor farm built in a rough neighborhood.

“We have a lot of high blood pressure, a lot of diabetes, which then leads to kidney problems,” he said. “There are dialysis centers all over Petersburg. That’s what they build here instead of grocery stores.”

He and colleagues recently made kale and potato soup for the neighborhood and were overwhelmed by the response, he said.

The most enthusiastic tasters were people in their 60s, he said.


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