Put a million unemployed to work by lowering retirement age

Progressive Democrat, Marcy Winograd, is offering a novel solution for jump-starting job creation.  Her ideas can be more closely examined in her campaign’s latest press release, which we have copied here for readers:

Marina del Rey, CA, February 4, 2010  —  Marcy Winograd, Congressional Candidate in the 36th CD, announces her support for Congressman Dennis Kucinich’s (D-Ohio) proposal for new jobs legislation, which would offer seniors incentives to retire early with social security benefits at age 60.  “If we used stimulus money to provide scaled-back social security benefits to early retirees, their jobs would then be available to younger unemployed Americans,” says Winograd, adding, “this would be the quickest and most effective way to put a million people to work.  We need a shot in the arm to revive our economy, otherwise this recession, which threatens to develop into another Depression, could plague us for years.”

Today, full social security benefits are paid for retirement at age 66, with early retirement permitted between age 62 and 66, at a proportionally scaled-back benefit level.  Early retirees do not add to social security costs because they accept permanently scaled-back benefits.  The majority of retirees accept this reduction of their benefits in order to retire at some point between age 62 and 66.

 
“It is reasonable to expect that a substantial number of workers would retire at age 60 or 61, if they were offered the same level of benefits that they would qualify for at age 62,” says Winograd.  “These extra early retirement benefits would be paid for out of stimulus funds already appropriated in the Emergency Economic Stabilization Act.”

 
This incentive for early retirement could be offered for six months after Congressional enactment.

 
Census Bureau statistics suggest there are more than four million active workers who are between 60 and 62.  Within the six month duration of the program, an additional 1 million will reach age 60, bringing the number eligible for this program to more than 5 million.

 
Experience with the present social security program suggests that it is likely that 20% of these 5 million workers would accept this temporary opportunity to retire early, opening a million jobs to those presently unemployed who would appreciate an opportunity to apply their skills.

Payments under this special early retirement program are estimated to average $1,000 per month.  The direct cost of one million workers retiring an average of 15 months prior to regular social security eligibility would be $15,000 each, a total of $15 billion, a very low cost for opening one million jobs.  By contrast, the Congressional Budget Office has projected the cost of tax incentives to business to encourage job creation at $55,000 per job.

 
An additional necessary incentive to acceptance of early retirement would be to extend existing provisions for health insurance for early retirees to those who accept the proposed special early retirement.  The American Recovery and Retirement Act (ARRA) of 2009 provides a 65% subsidy for the cost of health insurance under COBRA, through a tax credit to employers for the cost of providing health insurance to employees who retire between 62 and 65.  This lasts until they become eligible for Medicare at 65, with the retirees paying only 35% of the cost.

 
This same benefit should be offered to those who retiree between 60 and 62.  The estimated cost of this health care benefit would add approximately $3 billion to the cost of the program, bringing the total cost of opening 1 million jobs thru earlier retirement to $18 billion.

 
“If we want to create more jobs now, rather than a year or two down the road, we need to think outside of the retirement box.  People who are sixty, who have worked their entire lives, may be ready to retire early, to spend more time with their grandchildren or learn a new language.  This Retire-Early-Give-Your-Job-to-Someone-Else legislation is a win-win proposal for all: the seniors, the unemployed, and the average American feeling the ripple effects of the economic downturn.  I urge Congress to act on this proposal without delay.”