OAS Age Eligibility Moved to 67, Why is Retiring Becoming So Expensive?

LvMIC:

We live in an age defined by unprecedented abundance.  As long as you don’t live in the sticks, a McDonald’s or Walmart is typically within a 15 minute driving distance of your residence.  This means cheap, calorie-rich food is just a few dollars away.  Just a century ago, access to fully cooked meat, fresh produce, and flash frozen meals capable of being microwaved to perfection in just minutes were all unthinkable.

By the same token, clothing, serving as necessary protection against the outside elements, has never been cheaper.  A full wardrobe of casual and formal wear can be purchased relatively cheaply at any given thrift or retail store thanks to advances in machinery and the division of labor.  What used to take days or weeks to sew together and assemble now fills department store shelves in all types of shapes and sizes.

And then there is technology.  Smartphones are now just as common in a person’s pocket as car keys and a wallet.  Iphones, Blackberries, or the myriad of replicas are more than phones; they are portable computers.  With the click, or push on a touchscreen, of a button, corresponding with someone across the world takes only seconds.  Cell phones used to retail for close to $4,000 in the 1980s.  Now an older style “flip” phone can be purchased for around $15 at any retail store.

Even those state-loving environmentalists who decry over any and every instance of economic production find it hard disputing the fact that life has never been so sanitary thanks to the widespread use of indoor plumbing, household cleaning products, climate controlled food storage such as refrigerators, and even asphalt paved roads which greatly cut down the amount of dirt-filled dust being kicked into the air.

Just like the title of Jeffrey Tucker’s latest book implies, it really is a “Jetson’s World.”  Kings never lived as good or had as much opportunity as even the poorest person in any modern, industrialized country.  Ludwig von Mises recognized this truth in his treatise Human Action:

Primitive man was always haunted by the specter of death from starvation. Civilization has freed us from these perils.

Material abundance may have elevated man above the impoverishing state of nature but that hasn’t guaranteed a life free of hard work or worry.  It’s almost hard to fathom that with all of man’s capitalistic achievements, many still fret over the prospect of a retirement mired in destitution.  If technology has allowed us to produce at such an astonishing rate where living standards are far beyond what was even thought possible just a few decades ago, why is the threat of living out one’s golden years in state of privation still so widespread?

It was recently reported in the Financial Post that under Prime Minister Steven Harper’s new budget proposal, the eligibility retirement age for Old Age Security and the Guaranteed Income Supplement (the equivalent of Social Security in the U.S.) is to be raised to 67 from 65.

The federal budget released last month calls for the eligibility age of OAS and the Guaranteed Income Supplement to increase from 65 to 67, over six years starting in April 2023. If you are 54 or younger, the government just grabbed about $13,000 in entitlement from you, a significant but not massive amount when you consider it in 2012 dollars.

“You do need to save a bit more. You could probably put away another $45 to $50 a month and be covered for the difference,” says certified financial planner Ted Rechtshaffen of TriDelta Financial about what someone like me in their 40s could do to compensate for the shortfall.

No matter how many candid examples exist of the thieving, despotic nature of the state and the officials which staff it, modern day voters are almost always caught off guard by announcements such as this.  They have been lulled into a state of dependency on handouts from the mobsters of Parliament.  Years of public schooling has failed to teach the valuable lesson that what the state giveth, it can take away just as easily.
The trend in longer life expectancy and increasing cost of living is being blamed for the move to raise the OAS eligibility age.  But shouldn’t rising living standards ensure the opposite?  If the world is producing more goods and services than ever before, how is it that the golden years are beginning to lose much of their luster?

The answer is that while dynamic market competition has driven ingenuity in certain sectors such as fast food and telecommunication technology, government intervention has put the brakes on capital accumulation and the entrepreneurial spirit.  From health care to intellectual property, the state’s bureaucratic maze of restrictions, red tape, and regulations has stifled and prevented an immeasurable amount of miraculous inventions from reaching the marketplace.  When central planners desire nothing more than control, the chains they place on private business end up cartelizing industries and drive up cost of entry for smaller competitors.  Without the threat of fresh ideas attracting market share, already established market players have no incentive to improve beyond their just-as-protected competitors.  This crony capitalism prevents many cost saving products from ever having a chance at hitting store shelves.

Most importantly is the continual currency debasement facilitated by central banks all around the world.  While not always the best indicator, there is plenty of anecdotal evidence out there of retirees struggling to earn a return on what they thought were safe investments.  With interest rates being suppressed below the rate of inflation (and even more so if you don’t believe the government’s misleading calculations), money in a bank is actually losing its value in real terms.  Of course such a policy is carried out to juice economic growth by forcing people into spending.  But how do you save for retirement when all central bankers and politicians care about is the short term?

As Murray Rothbard noted:

In reality, the unhampered free-market economy will usually increase the supply of goods and services and thereby bring about a gently falling price level, as happened in most of the nineteenth century except during wartime.

Just imagine a world where the prices at the local grocer go down every year instead of up!

Even in the U.S., 25% of Americans believe they won’t be able to retire till they reach 80 years of age.  Decades of being told to spend now and worry later by the Keynesian-minded press and rulers in Washington has made act of building a nest egg incredibly unpopular.  With prices for goods and services constantly trending upward, setting aside any significant portion income for the purposes of saving has become nearly impossible.

Long term well being has been sacrificed for the profligacy of the state.  Agonizing over having to work two more years till retirement is almost frivolous when if the slavedrivers in public office would keep their grubby mitts off the enriching market process, we could all retire at the age of 50.