The Duck of Minerva

The Duck Quacks at Twilight

Depressing thought of the day

August 7, 2007

I’m currently reading about the economic impact of the demographic shift (i.e., aging populations) of Eastern Europe and the former Soviet Union. One of the reforms being advocated to improve the solvency of the pension systems is, of course, raising the retirement age, which in most of these countries is 60 or lower.

Raising the retirement age has been a common theme in discussions about Social Security reform in the US–the problem in a nutshell (for all of these pension systems) is that too many old people collect too many benefits, and the system is funded by too few younger workers. The problem is often phrased as “people live longer so they collect benefits longer”.

Pension reform, then, is about making sure, actuarially speaking, that a sufficient number of people die before they can collect any significant amount of benefits–otherwise the system won’t be able to pay for people who live into their 90s.

Several years ago, one of my father’s coworkers retired. They held a big retirement party for him. A couple weeks later, my parents attended his funeral. He had dropped dead of a heart attack, barely two weeks into his retirement. I doubt he collected a single Social Security check. From the point of view of the pension system, he was the ideal worker. He paid into the system, and never got anything out.

In Russia, the retirement age for men is 60. Unfortunately for them, the average life expectancy for men is just under 58.

+ posts