Friday, October 14, 2011

The Retirement SNAFU

Pascal Terrasse, Hollande's advisor on retirement issues, has torpedoed the party's Operation Obfuscation by making a clear statement:

«Il y a à la fois ce que les gens ont compris, ce que dit le PS, et ce qu'on fera. C'est trois choses différentes... C'est compliqué. Ce que les gens ont compris, c'est: les socialistes, s'ils reviennent au pouvoir, vont remettre la retraite à 60 ans. Ça n'a jamais été dit. Après, il y a la partie projet, c'est moi qui l'ai rédigée, je suis quand même bien placé. Je dis simplement que l'on acte le principe de l'allongement de la durée de cotisation: 41,5 années. Ça, on l'a acté. Pour avoir sa retraite à taux plein, il faut avoir 41,5 années. Et nous disons qu'on pouvait partir à 60 ans dès lors qu'on a ses 41,5 années. On est sur le principe "retraite à la carte". Si vous partez avant, vous pouvez, mais là vous avez une décote.»

I hope that Hollande comes clean before he debates Sarkozy on this issue. An honest statement of what he actually intends to do would be a refreshing change from the demagoguery of "back to age 60." What modifications will be established for those whose careers are interrupted by pregnancy, illness, or unemployment? What accommodations for those whose work is physically difficult? What penalties for early retirement? These are the real issues, not the utterly fictitious "legal age of retirement."

14 comments:

Kirk said...

As you say, it is fictitous. But I'd also say that not only do the French obfuscate the question with their terminology, but you do as well with your translation. In US English, this would be called the "early retirement age." Saying "legal age" means nothing in English, which is why so many news reports around the world got this question wrong, thinking that people had full retirement benefits at age 60.

Arthur Goldhammer said...

Kirk, I don't think "early retirement age" has a transparent meaning in English. Here is what the Social Security Administration says: "You can retire at any time between age 62 and full retirement age. However, if you start benefits early, your benefits are reduced a fraction of a percent for each month before your full retirement age." It does not apply any specific name to age 62 but simply indicates that this is the earliest age at which you can start collecting benefits.

Arthur Goldhammer said...

I meant to include a link:
http://www.socialsecurity.gov/retire2/agereduction.htm

Kirk said...

I worked in pension plan administration for about 5 years, back in another life. The term is, indeed, "early retirement age." Anyone approaching retirement would know that term.

http://www.google.com/search?client=safari&rls=en&q=early+retirement+age&ie=UTF-8&oe=UTF-8#sclient=psy-ab&hl=en&safe=off&client=safari&rls=en&source=hp&q=%22early+retirement+age%22&pbx=1&oq=%22early+retirement+age%22&aq=f&aqi=g-c1g3&aql=&gs_sm=e&gs_upl=12032l16755l0l16995l15l8l1l0l0l2l216l1356l0.7.1l9l0&bav=on.2,or.r_gc.r_pw.,cf.osb&fp=ca209a805e889a48&biw=1280&bih=1308

Kirk said...

Sorry about that link; just google "early retirement age."

And Social Security uses slighty different terminology, because they're not a pension plan, technically.

Arthur Goldhammer said...

Well, I'm approaching retirement age, and I didn't know that.

Kirk said...

Interesting. Have you never looked at your retirement plan and its conditions? Are you trying to put off the inevitable? :-)

Arthur Goldhammer said...

Since I'm self-employed, my retirement plan is me, and I've always known that I'd be working well past the "early retirement age." Indeed, I'll probably never stop. But thanks for the terminology, which I will use henceforth.

Kirk said...

I didn't realize you were self-employed; I thought you had something at the university. I'm self-employed as well, and plan to work as long as I can… I guess since we don't do physical labor, we can soldier an, at a slower pace, for a while.

Anonymous said...

What Pascal Terrasse says is precisely what Hollande said in Wednesday's debate, if I'm not mistaken.

Arun

Tom Holzman said...

Kirk - "early retirement age" may not have a techical meaning, but it certainly denotes something fairly clear as it is used in day-to-day parlance. Most people would understand the term to denote the earliest age at which you can retire at all with a benefit. They would also understand that, if you retired at that age, your benefit would be reduced from whatever the full benefit is for normal retirement age. While in the Social Security context, 62 may not technically be an "early retirement age", most people would understand it as one in the way that I have suggested.

Cincinna said...

In the US, "early retirement" refers to the age at which one can claim monthly Social Security benefits. It has nothing to do with the age at which one stops working. One can collect Social Security monthly benefits starting at age 62. Full retirement for people born after 1947 (law changed by Bill Clinton) is now 66.7 yrs. Medicare benefits still begin at age 65. The benefit at age 62 is 20% less than that at age 65.
Important to keep in mind that at age 65, one must be collecting SS to be eligible for Medicare.
We have just gone through the calculating process with my in-laws and concluded it is desirable to start collecting your SS at 62, even if you have no intention of retiring. They are self employed, and have no desire to stop working.
My Dad retired at 77 but started collecting SS at 65.
The SS administration is extremely competent, helpful, polite, and efficient. It us a pleassure to deal with them.
It may seem a little early, but if you are nearing 65, it is wise to consult with and Elder Care lawyer, who specializes in estate, trust, and life planning for seniors.

Tom Holzman said...

Cincinna - did your in-laws consider the effect of offset for other work earnings if you start to collect SS before reaching the age of full benefits?

Cincinna said...

@Tom
You raise a good question. With my in-laws, it isn't a question of the actual Social Security payments which are a very small portion of their income. It is more a question of protecting my MIL who is 8 years younger than FIL with some health issued. If she didn't start collecting at 62, if anything had happened to my FIL before she turned 66, she could not collect his SS , which is much greater.

I'd be interested to hear your opinion of the 62 v 65/66/66.7 options. Do you advise people about their options?

We have all paid into SS throughout our working life. It is our own money, not an entitlement plan, even though it is a Ponzi (pyramid) scheme.

Working with younger working people, most Elder Care lawyers are advising them to invest fir their own retirement. If you took the amount you paid in to SS over 40-45 year working life, and invested it in a no-risk savings account, TBills or CDs, at age 65 you would have millions, more if you are self-employed, and pay the entire 12 1/2% payroll tax, FICA etc yourself.