A report in today’s New York Times describes a policy analyst as believing that Social Security needs to change because people are”living longer.” This is a misconception that gets repeated over and over, one which a lot of otherwise well-informed people are convinced is true. The logic goes something like this: People are living much longer than they were when Social Security was created, so its retirement benefits can’t possibly hold up under the strain. After all, life expectancy for Americans was less than 62 years in 1935, and now it’s more than 77 years. That must present a terrible problem for the program, right?

Wrong. Here’s why:

First, that low figure from 1935 was mainly due to infant mortality, along with deaths from other childhood diseases for which we now have immunizations or treatments. Remember, Social Security is funded by the people who collect the benefits, as well as their employers. So they need to have worked and paid into the system in order to collect. That means infant mortality and childhood deaths aren’t a factor.

Nevertheless, here’s what Deficit Commission co-chair Alan Simpson said recently: “they (Social Security’s founders) thought you would die at 57. That’s why they set the (retirement) age at 65.” (Simpson’s video rant against activist Alex Lawson became notorious for its rudeness, but comments like that also revealed an inability to comprehend the basic information needed to assess this kind of program.)

Life expectancy does raise important questions, however. Here’s one: On average, how many years do people live to collect their Social Security checks?

Let’s look at the numbers. Census data shows that people who reached the age of 65 when Social Security was created in 1935 lived until roughly age 74, on average. (See Manton & Lamb, Princeton.) In 2004 they could be expected to live until they were 82 or 83. That’s good news for everyone concerned, and it’s certainly actuarially significant for Social Security.

There was greater mortality during people’s work lives back then, too. A thirty year old would live another 34.52 years on average in 1929-31, or until she or he was 64 or so, whereas a thirty-year-old in 2004 could expect an average 48.2 more years of life, which would bring them to the age of 78. (Figures are from US census data.) So some of the people who died young in earlier decades might have been expected to pay into the program for at least some period of time without ever collecting benefits.

While the overall life expectancy figure is too crude to be meaningful, these numbers present legitimate (if highly manageable) concerns. That’s why the Greenspan Commission was created in 1983. After the Greenspan Commission’s changes were enacted, the program was able to build enormous surpluses in its trust funds – surpluses which still exist in the form of government debt, and which are expected to grow despite years like the current one, in which benefits payments will exceed tax revenues. The Greenspan Commission certainly knew that baby boomers were coming — the youngest of them was 19 in 1983 – and they knew about expected increases in overall life expectancy (which, in any case, was only three and a half years less in 1983 than it is today).

That’s why the program’s in such good financial shape. It’s true that under current circumstances it will need additional funding to pay more than 75% of promised benefits after 2037 (which is easily fixed by lifting the cap on the payroll tax.) But why did the Greenspan Commission fall short at all?

The main reason, according to L. John Bivens of the Economic Policy Institute, is that rising income inequality reduced the revenue that the program could collect from the payroll tax. Remember, that tax is capped so that high earners stop paying after a certain point (currently about $106,000). So as income inequality increased, less income was taxed to pay for Social Security. As Aaron Bernstein wrote in Business Week in 2005, “Democrats and Republicans alike may be trying to solve the wrong problem. Rather than focusing on how many workers will be around to support retired boomers, some experts think the logical response is to recapture the revenue lost as rising inequality lifted a greater share of aggregate US wages out of the reach of the … payroll tax.”

What’s more, life expectancy is strongly affected by socioeconomic status. In 1980 life expectancy at birth was 2.8 years less for the lowest socioeconomic group than it was for the highest, and by 2000 that different had grown to 4.5 years. So on average, lower-income contributors to Social Security won’t be around to collect as long as higher earners will.

What are the right “fixes” for this not-broken program? First, lift the payroll cap. Second, address wage inequality. Third, address the health factors that are stealing years of life from lower-income Americans. Isn’t that what we mean by “the pursuit of life, liberty, and happiness”?

Sure, we’ll have to pay a little more in benefits if that happens. But the numbers say we can afford it.