Collect Early and Often

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A recent story in the L.A. Times caught my attention, because it addresses an issue I have written a good deal about and it has an air of bewildered concern that I find amusing, coming as it does from that cesspool of contemporary liberalism.

The article, “Early Retirement Claims Increase Dramatically,” was written by Mike Dorning and appeared on May 24. It reports that the Social Security Administration is seeing a major surge in the number of people taking early retirement. The number is up an incredible 250/0 over last year. This has caused considerable surprise, since the conventional wisdom has been that people would hold off retiring in the face of the precipitous drop in the value of their portfolios.

The article reports speculation that the reason many peo- ple are retiring at 62 rather than 66, thereby lowering their Social Security income by up to a quarter, is that they are under financial pressure from being unemployed or under-employed. And the article quotes an AARP expert who worries that these early retirees will be paying a heavy price in security in the decades to come, as they try to survive on the lower benefits.

I think that the Times is incredibly obtuse here. Even before the jump last year, nearly half of all eligible people were taking benefits the minute they turned 62. The reason is obvious, but I will spell it out slowly, so that even the people at the Times can grasp it.

Point 1: Social Security is an intergenerational Ponzi scheme, using present taxes to support past retirees.

Point 2: The most likely way for the government to deal with the impending insolvency of the system will be to “means-test” benefits. That is, anyone the administration deems “rich” will simply be told that he or she is no longer eligible to receive benefits. This will be justified by the usual class warfare insinuations (the rich are evil, they deserve only death, etc.).

Point 3: This means test will include “grandfathering” of current beneficiaries, because it is easier to deny people an entitlement they hope to receive than it is to take away one already given.

Point 4: The point of insolvency will be reached as the Boomer generation retires. This generation, which has just started to receive Social Security benefits, is a much bigger cohort than the ones that follow.

Point 5: It is better to receive reduced benefits than no benefits at all.

Point 6: The Baby Boomers, despite extensive drug usage while young – and in some cases much later!-  are not stupid. They can see points 1-5 with transcendent clarity, and are therefore applying for benefits as soon as they legally can.

How hard is it to understand all this?

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