Larry Fink, CEO of BlackRock went on CNBC today to discuss the issues with the US retirement safety net. And, surprise, he thinks the solution to fix everything is to let him and his cohorts play with all that money. No, he really didn’t say that — he just said the best solutions are government and business “working together”. And he points to 401(k)s, which he makes money managing, as the way forward.
But the keystone here is him calling the current 65 year old retirement age “a bit crazy.” He points to:
Increasing lifespans create further difficulties when trying to improve the retirement system, Fink said. This issue is of increasing relevance as blockbuster weight-loss drugs have already begun drastically reshaping the healthcare landscape, he said.
Let’s examine this. A great place to start is the www.equality-of-opportunity.org/… look at health and life expectancy. The link above goes to a graph that shows that men in the top 1% of incomes in the US have a life expectancy 87.3 years while men in the bottom 1% have a life expectancy of 72.7 years.
And, don’t forget, the 65 retirement age has already disappeared. Currently the lowest age at which you can claim full benefits is 66 years and that is only if you were born before 1954. It goes up from there to 67 years if born in 1960 and later. If you claim earlier, you just get less.
So, currently, if you are in the bottom 1%, you are expected to collect benefits for a whopping 5.7 years. So, increasing the retirement age by one year reduces that person’s total retirement benefits by almost 20%.
That makes saving Social Security simple — just cut out 20% of potential exposures.
Even for the median income male the life expectancy is almost 6 years less than the 1%. Estimating the life expectancy as 81 years, a one year increase is still an 8% drop.
Please note that the other variable here is the benefit level. The 1% income level male is likely to be collecting the minimum benefit of $1,066.55 per month. To get that you have to have 30 years of payments into Social Security. The absolute minimum you can get $50.90 per month.
Oh, please remember, if you have less than 10 years of payments into Social Security, you get nothing.
So, Mister Rich Guy, I think your opinion is both incorrect and callous. Looking back with a life expectancy of almost 20 years past the current Social Security and working in a job that caters to your every whim it looks pretty easy. Let’s talk about a national mandatory retirement age from any publicly traded firm, with no pension if you were an executive, of 65 and we can resume the discussion.