Tuesday, September 29, 2015

The misery of a poor old age

The idea that everyone should work longer since everyone is living longer is one used to justify policy proposals such as cutting Social Security benefits. But that idea is a misleading oversimplification. In America, those who live the longest get to enjoy years of relaxation, but those with the shortest life expectancies tend to work into their final years.

The existence of a growing gap in longevity between the rich and the poor is clearer than ever: Between 1930 and 1960, men at the top of the economic ladder saw an eight-year increase in life expectancy, while men at the bottom saw virtually no change. That’s just one finding from the National Academy of Science, which has documented how the growing inequality of wealth and income in the U.S. has been accompanied by, and perhaps is actually causing, an increasing gap in life expectancy between the wealthy and the working class.

For men born in 1930 who lived in the bottom 20 percent of income distribution, life expectancy at age 50 was 76.6 years; for those born in 1960, it was mostly unchanged at 76.1. For men who lived in the top 20 percent of the income distribution, it was a different story: Their respective life expectancy numbers jumped from 81.7 to 88.8.

This gap is not just about overall longevity—it’s about the quality of life the elderly will have at the end of their days. The Retirement Equity Lab at The New School has pointed out that the growing class and racial gaps have dire implications for retirement policies. A cut to Social Security benefits—which raising the retirement age, an oft-suggested proposal, essentially is—would induce people without means to work in old age. This would produce an unseemly form of inequality: The people who live the longest will be able to retire, and the people who have to work longer will be the same people who are losing at longevity. The poorer will work and the richer will play in old age, a class divide we’ve already seen in the 19th and early 20th centuries.

Picketty's Capital in the 21st Century summarizes it for you; the higher up in the wealth scale someone is, the less likely their income is derived from their labor and the more it is derived from their investments (stocks, bonds, etc.). Those at the top of the wealth scale receive practically all of their income from their investments and little if any from their labor, so they usually aren't really working through their lives in the first place.

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