Annals of busted blog posts

I was going to propose an alternative to raising the social security retirement age: reducing the cost of living adjustment (COLA) as beneficiaries get older.  My thought was that as people get older, they spend less. And they do, except for one thing: health care. But that little exception does effectively kill the idea. Here's what I learned from a 2009 paper by Mariacristina De Nardi, Eric French, and John Bailey Jones:

Our model predicts that average out-of-pocket medical expenditures rise from $1,100 at age 75 to $9,200 at age 95. While a 95-year-old in the bottom quintile of the permanent income distribution expects to spend $1,700 on medical expenses, a person of the same age in the top quintile expects to spend $15,800. Medical needs that rise with age provide the elderly with a strong incentive to save, and medical expenses that rise with permanent income encourage the rich to be more frugal.

I was motivated by Ezra Klein's point* that raising the retirement age disproportionately affects lower-income Americans, whose life spans have not increased nearly as dramatically as the more affluent, and is particularly hard on those who perform bodily labor, which becomes increasingly excruciating with age. Better, I thought, to have a viable retirement income earlier, and only lose some growth in the payment gradually.  But never mind...