THE OLD AND THE RESTED

By JOHN TIERNEY
New York Times, June 14, 2005

Men in their 70's raced on bikes for 40 kilometers in this month's National Senior Games in Pittsburgh. A 68-year-old woman threw the discus 85 feet, and a 69-year-old man hurled the javelin nearly half the length of a football field.

Is it possible that people this age are still physically capable of putting in a full day's work at the office?

I realize I'm being impolitic. In the Social Security debate, the notion of raising the retirement age is the elephant in the room, as Robin Toner and David Rosenbaum reported in The Times on Sunday. Both liberal and conservative economists favor the change, but politicians are terrified to even mention it to voters.

Americans now feel entitled to spend nearly a third of their adult lives in retirement. Their jobs are less physically demanding than their parents' were, but they're retiring younger and typically start collecting Social Security by age 62. Most could keep working - fewer than 10 percent of people 65 to 75 are in poor health - but, like Bartleby the Scrivener, they prefer not to.

The problem isn't that Americans have gotten intrinsically lazier. They're just responding to a wonderfully intentioned system that in practice promotes greed and sloth. Social Security is widely thought of as a kumbaya program that unites Americans in caring for the elderly, but it actually creates ugly political battles among generations.

With the help of groups like AARP, the elderly have learned to fight for the right to retire earlier and get bigger benefits than the previous generation - all financed by making succeeding generations pay higher taxes than they ever did themselves.

The result is a system that burdens the young and creates perverse incentives for people to retire when they're still middle-aged. Once you've worked 35 years, more work often yields only a tiny increase in your benefits (sometimes none at all), but you still have to keep paying the onerous Social Security tax, which has more than doubled over the last half century.

If the elderly were willing to work longer, there would be lower taxes on everyone and fewer struggling young families. There would be more national wealth and tax revenue available to help the needy, including people no longer able to work as well as the many elderly below the poverty line because they get so little Social Security.

Getting that kind of system seems politically hopeless at the moment here, but it already exists in Chile. Its pension system has a stronger safety net for the older poor than America's (relative to each country's wages) and more incentives for people to work, because Chileans' contributions go directly into their own private accounts instead of a common pool like Social Security.

Once Chileans accumulate enough money in the account to finance a pension that pays at least half their salary (which is better than what the typical American gets from Social Security), they can start collecting the pension and still go on working. In fact, they have an extra incentive to go on working because they keep more of their paychecks: elderly Chileans, unlike Americans, are freed of the obligation to continue making pension contributions.

The result has been a big change in working habits. Before the private-account system began in 1981, Chile had a traditional pension system going broke with the same problems as America and Europe: rising taxes on the young to pay for older workers who were retiring earlier and earlier. But under the new system, there's been a 30 percent increase in the labor force participation by workers in their 60's, according to two economists, Estelle James and Alejandra Cox Edwards.

Best of all, Chileans who control their own private-account pensions don't have to count on politicians or groups like AARP to decide when they can retire. It's a personal choice, not a public battle, and the Chileans I interviewed had a saner attitude about retirement than the American baby boomers dreaming of retiring to decades of golf.

A 57-year-old schoolteacher, Maria Clara Meyer, told me she was thinking of spending her 60's running her own tutoring program or setting up an ecotourism business in Chile. "I'm a little tired of my teaching job," she said, "but I'm not stupid, so I shall keep doing something. It's not healthy for you to stop working if you're still able." And not healthy for your country, either.