On tennis and Social Security

Carlos Alcaraz recently won the first set in his Wimbledon men’s final match against Jannik Sinner but lost the next three sets and the match.  Had a sports reporter declared Alcaraz the winner after the first set and had the outlet for which the reporter worked published that report, both would have been red-faced.  None did, of course, as reporters and most news outlets have high standards of accuracy.

“What has that to do with Social Security?” you ask. Read on.

It is not news that Social Security is in dire financial straits. Scheduled retirement and survivor benefits exceed revenues earmarked to pay for them. Social Security’s financial reserves are now covering the gap, but those reserves will be depleted in 2033 according to official projections. That worrying deadline may come sooner, as legislation enacted and administrative policies adopted after that projection was completed, notably including the recently enacted major tax-and-budget legislation (OBBBA), will shrink those reserves even more quickly. The Committee for a Responsible Federal Budget estimates the reserves will now run out in 2032.

These facts are widely known because the Social Security trustees have been issuing similar projections for more than a quarter century, and newspapers, magazines, and television news programs have reported them all. Without Congressional action of some kind, retirement and survivor benefits will be automatically cut in 2033 by an estimated 23%.

To deal with this problem, some Republicans have proposed various benefit cuts including “raising the normal retirement age” at which full benefits are paid.  That age is now 67.  Raising that age 69 would cut all newly awarded retirement benefits by about 13%. Such a change would be fair, its advocates claim, because rising life expectancy has increased program costs, and people who live longer should be expected to work longer.

“Not so fast,” reply opponents of such an across-the-board cut. This approach is not fair, they say. Life expectancy has increased for high earners, but little or not at all for low earners. Why, they ask, should low-earners have their benefits cut because high-earners live longer?

Enter a recent claim by Mark Warshawsky, published on the website of the American Enterprise Institute (AEI), that earnings-related gaps in mortality rates have not been getting wider among Social Security beneficiaries. He asserts that previous studies documenting widening longevity gaps between high and low earners are flawed. He points to an actuarial note published by the Social Security Office of the Chief Actuary in December 2024 that he believes is free of those flaws. He states that this study shows that the longevity gap has stopped widening since the early 2000s. Because the earnings-related gap in longevity has stopped widening, Warshawsky asserts, “policymakers can be confident that a uniform increase in the Social Security retirement age will be fair.”

In fact, the actuarial study that Warshawsky cites shows conclusively that, contrary to what he claims, earnings related gaps in longevity have been widening for the last quarter century. The error is about as glaring as would have been a sportswriter calling the outcome of the Wimbledon men’s final after the first set.

Warshawsky bases his statement on a single graph, one of 24 in the actuarial study, based on mortality rates only of male recipients of Social Security benefits and only of those age 65 to 69. It does not show mortality rates of women, which have widened notably. Nor does it show mortality rates beyond age 69, which have widened notably for men … and for women, too.

Even the one graph that Warshawsky reprints, which would not support his policy conclusion even if he had read it correctly, indicates some widening in earnings-related mortality rates for beneficiaries ages 65 to 69. The mortality rates of SSA male beneficiaries at these ages who are in the bottom earnings quintile have barely budged since 2000 (other than during the COVID-19 spike, which affected everyone, but low earners most), while mortality rates in the top quintile have fallen sharply.

It is distinctly odd that a seasoned scholar would make such an egregious error. But speculations aside, the question remains: How can Congress address the looming depletion of Social Security reserves? An ultimate deal is likely to include some net benefit cuts and some tax increases. Advances in life expectancy can be invoked to support cuts in benefits for high earners. They cannot, however, honestly be used to justify cuts in benefits for low earners.

And there is one more point. The debate about how to close Social Security’s funding gap will be difficult and rancorous, as the ideological gaps are wide and the financial stakes are huge. Using data with care and honesty will be essential to find a solution that will endure.