Arguing against the rush to retire

November 11, 2007|By SUSAN REIMER

Like you, I have been working and raising children for a quarter century and, of late, I have been daydreaming about what it would be like to retire from both jobs and have some fun.

Or at least take a three-month nap.

But according to Isabel Sawhill, senior fellow at the Brookings Institution, a woman whom I like and admire, it would be socially irresponsible for me to do so.

"You can't retire at 62 and play golf on your Social Security check," Sawhill said to me. (I was actually thinking of retiring at 62 and gardening with my Social Security check.) "It isn't fair to the next generation."

Sawhill, an economist, is barnstorming the country as part of the Fiscal Wake-Up Tour, making the case in city after city that the national debt, the war on terror, combined with the Social Security and Medicare checks baby boomers will soon cash in the millions, will bankrupt this country in short order, leaving next to nothing for the care and education of our grandchildren.

Not my grandchildren. And probably not yours.

There is a two-tier economy in this country, and the middle and upper classes will make sure their children and grandchildren have quality child care, the best education and finest health care. It is the rest of the children who will be in trouble.

Sawhill makes the case that people like you and me should postpone our retirement, so that we don't draw down Social Security, and pay for some of our own health care, which will only be more costly as we age, because we have conscientiously saved for our retirement and we have the money to do it.

That would mean more money to invest in children.

"It is a question of intergenerational equity and where children fit into an aging society," said Sawhill, whose silver hair suggests that she could probably retire if she didn't like her job so much.

"There is a tsunami coming once the baby boom begins to retire starting next year," she said. "Deficits will swell to roughly $700 billion within a decade ... and keep rising indefinitely to levels that simply explode off the charts."

Health care costs for this aging population, she said, will produce "unsustainable deficits as far as the eye can see."

In the next three years alone, simply the growth in federal spending on Medicare, Medicaid and Social Security will cost almost as much as the total this country spends on children - children who must be much better educated in order to inherit a world so much more complex than the one we live in now.

We could raise taxes to pay for both the young and the old, but Sawhill says, "No feasible level of taxation would ever cover the costs." She makes the case that Social Security and Medicare were never meant to be entitlements. They were meant to be insurance for those among the elderly who experience catastrophic illness or disability and those who worked in jobs that never paid enough for them to save for their own retirement.

The rest of us should be taking care of ourselves.

Sawhill knows that what she suggests is untenable to most in this country. We all believe we paid into Social Security in order to take money out, like a Christmas Club. None of us thought of it as only a disaster fund.

Sawhill says we should all work longer because we can - the life expectancy at age 62 right now is an additional 21 years.

By working longer - perhaps part time - we can continue to contribute to Social Security as well as the national economy instead of drawing a stipend.

The money could be used to reduce the national debt, keep the entitlement programs solvent and there would be some left to make sure the next generation of American workers, babies now, is up to the task.

Those of us who can afford it - Sawhill mentions Bill Gates - might be asked to contribute more heavily to Social Security or not take any benefits at all. We might be asked to pay for our own health insurance, or a part of it.

In return, our grandchildren will be expected to save more, through a variety of vehicles, for their own eventual retirement.

Sawhill talks of a new social contract between aging Americans and their grandchildren, one that involves sacrifice on both sides. We can't retire at 62 and spend our Social Security checks on fun. They are going to have to save much more for their own retirement and health care than we did.

"The transition would not be easy, but it would lead to a stronger country, and a fairer one," said Sawhill.

She worries that the selfishness of which we boomers are so often accused will keep us from doing the right thing, and she might be right.

But if I think of all of this in terms of the grandchildren that are out there in the future, waiting for me to do right by them, it is a little easier to show up for work for another day, another year, another decade.

susan.reimer@baltsun.com

ONLINE

Read recent columns by Susan Reimer at baltimoresun.com/reimer

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