*Age inflation--longer life expectancies--poses a serious threat to Social Security and Medicare, according to a new research paper from the National Bureau of Economic Research. Absent an adjustment for higher life expectancies, the burden on government finances will be crippling once boomers begin to retire in force. When Social Security was created, 65-year-olds could expect to live another 12 years on a gender-blended basis. In 2004, 65-year-olds could expect an additional 19 years. Accounting for higher life expectancies, the normal retirement age for Social Security in 2004 would have been at least 71, with 73 or 74 being more consistent with the retirement age of 65 in 1935. Such an adjustment would be politically difficult as was the phased increase to age 67. (The Wall Street Journal, 20-Aug-2008, Central ed., p. D2)
*0805 The trustees of the Social Security and Medicare trust funds sounded the alarm again about their long-term financial outlook. The Medicare trust fund will be exhausted in 2019 and the Social Security trust fund in 2041, according to the latest annual report. The dates are unchanged from last year. Treasury Secretary Henry Paulson, the managing trustee of both trust funds, called for all sides to come together to find a solution. But this is an election year and there is little evidence there will be a rush to action. So far, the issue has not even resonated on the presidential campaign trail.