A friend of mine posted this on Facebook: “Interesting statistic – in 1930 the average life expectancy in the US was 58 for men and 62 for women. That’s amazing! Now we feel at those ages we have a lot of living left to do!”
That led to a conversation on Social Security and this question: “The Stat posted was for 1930. How can it be 6 years later social security established retirement age at 65? If the average life span was under 65?”
So of course I had to get out my trusty dusty stats.
Though the life expectancy at birth in 1930 was only 58/62 (the chart I’m looking at says 59/63 for 1929-1931, FYI, not much different), that included a high infant mortality rate. Looking at age 20 (entering the workforce), the life expectancy was another roughly 47 years (age 67/68). So Social Security was designed in 1935 with the intent that it would only kick in at end of life. Which fits the goal of Social Security: protect the most vulnerable elderly. (The modern idea of retiring before you had to physically stop working was only gradually percolating through the country at the time.)
However, the most relevant life expectancy number for the Social Security Board was at 65, which was roughly another 13 years (age 77/78). Among these, the ones who were starting to outlive their cohort, were the vulnerable elderly, and the older they got, the more vulnerable they became. At that moment in time (1929-1931), actuaries estimated that 53% of the men and 60% of the women had survived to 65. (These numbers were for whites, by the way. The numbers for blacks were not that high.) Check out the growth of the “number dying” column before and after that age, especially for the men. Then look at the “number alive” column. Only 42% of 70-year-olds were expected to still be alive, and less than 30% of 75-year-olds.
Now, of course, the numbers are a lot higher. As of 2014, the number of people surviving to 65 was 84% overall. Social Security was never meant to send benefits to that much of society. Receive taxes from, yes. Pay out to, no. To get an equivalent survival rate in 2014, the retirement age would have to be over 80. And then there are the inherent structural issues, but that’s a topic for another day (or read on some of them here).