Important and worrying truths, even for people far from retirement, are hidden behind in the plentiful advice about Social Security benefits.
Some experts suggest delaying the start of taking benefits, because the payments will be higher if you wait, rather than beginning the year you are eligible for full benefits. That could be helpful advice, depending on your assets, but it may be an illusion.
The advice promoting delay of benefits is often accompanied by suggestions that it is “usually” and “typically” worth doing. Beware of those we words. We are all different, and you may not be usual or typical.
This suggestion also ignores the underlying math. If you start when first eligible for full payments instead of waiting, you receive payments years earlier. If you wait, monthly payments are greater. Your life expectancy is the same in either case, so delay brings you added payments, but for fewer years.
The government is not giving you any special break for waiting. It has figured out that, over the average life span, it will shell out the same amount of money whichever option you choose.
During the early retirement years, you collect from the full-payment option compared with zero, if waiting. Only after 82 does the total of all Social Security benefits received under the delay option become greater than those from the full-payment option. After that, delay keeps bringing you more total government cash.
Will you live that long? Who knows? For the total U.S. population, average life expectancy is less than 79. That “typically” means you are likely to get more out of Social Security if you do not delay.
Now, here’s the hidden message.
It is reasonable to believe that life expectancy is increasing. After all, Social Security is increasing the full-payment starting point to age 67, presumably because people are living longer.
But life expectancy in the U.S. is not increasing. It is decreasing. Raising the age of full-payment eligibility is designed to save the system money as more Baby Boomers receive benefits. It is not now about adjusting to people living longer.
Increasing the full payment eligibility age may help save Social Security, but what makes the system more solvent raises far more serious issues.
In 1960, the U.S. had the highest life expectancy of all major developed countries, 2.4 years higher than the average. As people grew wealthier in all these countries, their life expectancy also increased.
By 1990, the U.S. began falling behind. In 2018, American life expectancy was 1.5 years lower than the group’s average, and the decline continues.
Why this slippage? Not obesity, though growing at a rapid rate and obvious. Diabetes deaths indicate its lethal effect, and they are climbing, but not enough to explain the major decline in life expectancy.
“We are seeing an alarming increase in deaths from substance abuse and despair,” says the lead author of a study on declining life expectancy. The Centers for Disease Control back this conclusion.
Deaths from the effects of substance abuse have skyrocketed. Though deaths from alcohol keep increasing, the principal substance problem is opioids.
Opioids are painkillers, originally used to ease the suffering of cancer patients. Pharmaceutical manufacturers assured doctors and others that they had little addictive effect. By 1991, doctors began to prescribe them for other kinds of pain.
The makers heavily promoted highly profitable opioids, though they knew that the drugs were virtually certain to be addictive. Thanks to sales without medically proven need, purveyors profited. The Tug Valley Pharmacy, in a West Virginia town of 3,000, dispensed millions of pills.
The markup between the prescription price and the street price of opioids led to a flourishing market and more money for manufacturers, distributors, pharmacies and, finally, drug dealers. The makers knew what they were doing and pushed the market hard.
Opioids took their toll. In 2017, over 70,000 people died from overdoses. The pharmaceutical manufacturers are now being heavily fined and have backed off promoting the drugs. Opioid deaths may decline.
How do you measure despair as a cause of shorter life spans? The suicide rate. It has been increasing each year, especially in rural areas. Maine is the most rural state, and its suicide rate is much higher than the national average.
The study found that suicide rate increases result from an unsatisfied need for public health programs and the lack of help for economically struggling families.
Drug deaths and suicides, cutting life expectancy, should not be ways to make Social Security work better. But they are.