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RE S E A RC H RE P O R T

Is It Time to Raise the

Social Security Retirement Age? Richard W. Johnson

November 2018

P ROG RA M O N RE T I RE M E N T P OL I C Y

AB O U T T H E U R BA N I N S T I T U TE

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Copyright © November 2018. Urban Institute. Permission is granted for reproduction of this file, with attribution to

the Urban Institute. Cover image by Gorodenkoff/Shutterstock.

Contents Acknowledgments iv

Executive Summary v

Pros and Cons of Raising the Retirement Age v

Possible Options to Protect Vulnerable Older Adults vii

Is It Time to Raise the Social Security Retirement Age? 1

Social Security’s Retirement Ages 3

Pros and Cons of Raising the Retirement Age 5

Mortality 6

Health Status 12

Job Demands 16

Labor Market Conditions for Older Workers 18

Social Security Benefit Claiming 26

Disability Safety Net 28

Growing Income Inequality at Older Ages 31

Potential Impact on Workers of Raising the EEA 33

Possible Approaches to Protecting Vulnerable Older Adults If the EEA Rises 38

Exempt Certain Groups from the EEA Increase 38

Make Other Aspects of Social Security More Progressive 41

Expand Employment Services and Training 41

Strengthen the Safety Net at Older Ages 43

Conclusions 46

Notes 49

References 52

About the Author 60

Statement of Independence 61

i v A C K N O W L E D G M E N T S

Acknowledgments This report was funded by the Alfred P. Sloan Foundation. We are grateful to them and to all our

funders, who make it possible for Urban to advance its mission.

The views expressed are those of the author and should not be attributed to the Urban Institute, its

trustees, or its funders. Funders do not determine research findings or the insights and

recommendations of Urban experts. Further information on the Urban Institute’s funding principles is

available at urban.org/fundingprinciples.

The author thanks Melissa Favreault and Jack Smalligan for valuable comments on an earlier draft.

http://www.urban.org/fundingprinciples

E X E C U T I V E S U M M A R Y v

Executive Summary Social Security faces a long-term financing problem. The program now spends more

than it collects each year, and Social Security’s trustees project the program will be

unable to pay full benefits beginning in 2034. Reducing the payment period by raising

the age at which beneficiaries can begin collecting benefits would improve Social

Security’s finances. The program could pay the same monthly benefits as it does now but

restrict them to older beneficiaries, maintaining annual retirement benefits for truly old

people while cutting costs. Raising the retirement age would also encourage many older

people to work longer, increasing income tax revenue for federal and state

governments. However, some older people, especially those with limited education and

incomes, could suffer financially if they had to wait longer to collect retirement benefits.

This report examines how raising Social Security’s early entitlement age (EEA), currently 62, might

affect beneficiaries and discusses different ways of protecting adults who might not be able to work

until qualifying for Social Security benefits. Possible options include exempting certain groups from the

increase (such as those in physically demanding occupations) or making other aspects of Social Security

more progressive to offset the EEA increase. Alternatively, programs outside of the Social Security

retirement system could be reformed to provide additional protection, such as by bolstering disability

benefits, extending unemployment benefits for older adults, or expanding cash assistance to low-

income seniors. Our discussion draws from a careful synthesis of the literature and the results of new

analyses of several household surveys. The study evaluates trends and disparities in life expectancy,

health status, job demands, labor market conditions for older workers, and Social Security benefits

claiming behavior. It also examines the effectiveness of the disability safety net and growing economic

inequality at older ages.

Pros and Cons of Raising the Retirement Age

Long-term improvements in longevity, health status, and educational attainment might justify raising

the EEA.

◼ Between 1960 and 2015, remaining life expectancy at age 62 increased 5.4 years for men (to

20.0 years) and 4.8 years for women (to 22.8 years). Social Security’s trustees, using their

intermediate assumptions, project that by 2050, life expectancy will grow another 2.8 years for

v i E X E C U T I V E S U M M A R Y

men and 2.4 years for women. Thus, if the EEA were to increase from 62 to 65 in 2050, people

who retired at the EEA in 2050 would spend about as many years in retirement as those who

retire at the EEA today; they would spend between four and five more years in retirement

(depending on their sex) than those who retired at age 62 in 1960.

◼ Health status predicts work ability and the capacity to delay retirement. Between 1972 and

2017, the share of adults reporting fair or poor health fell from 25.5 to 18.3 percent at ages 55

to 61 and from 28.6 to 19.1 percent at ages 62 to 65. Most of these improvements, however,

occurred before 2000.

◼ Educational attainment among adults in their early sixties increased sharply over the past four

decades, improving employment prospects at older ages. Between 1980 and 2017, the share of

adults ages 62 to 65 with a four-year college degree grew 21 percentage points for men and 22

percentage points for women.

However, health problems limit work capacity for many older adults, and there is little evidence

that work ability for people in their early and mid-sixties has improved much over the past two decades.

◼ Following a sample of adults ages 51 to 55 who were employed and did not report any work

limitations at that time, our analysis found that 35 percent developed an impairment or health

problem by age 65 that limited the type or amount of work they could do.

◼ Between 2000 and 2017, the share of adults reporting fair or poor health fell only 0.9

percentage points at ages 62 to 65 and increased 1.1 percentage points at ages 55 to 61. Rising

obesity rates appear to account for much of the recent slowdown in health improvements.

◼ Physically demanding jobs remain commonplace, even at older ages. In 2014, 34 percent of

workers ages 55 to 65 reported that their job required substantial physical effort, the same

share as in 1998.

Many older workers face a hostile labor market.

◼ Workers who lose their jobs at older ages face long odds of finding new work. Among workers

laid off between 2008 and 2012, 47 percent of those ages 50 to 61 and 65 percent of those age

62 and older remained out of work for at least 12 months, compared with only 35 percent of

those ages 25 to 34 and 39 percent of those ages 35 to 49.

◼ Employers are less likely to call back older job applicants than younger ones.

E X E C U T I V E S U M M A R Y v i i

◼ In 2014, 24 percent of workers ages 58 to 63 reported that their employers favor younger

workers over older workers in promotion decisions, up from 16 percent in 2002.

Delaying retirement is especially uncertain for older people with limited education. Although the

share of adults remaining in the labor force in their early and mid-sixties has increased over the past

two decades and the share of retirees collecting Social Security benefits at age 62 has fallen, people

working longer and retiring later are disproportionately college graduates. Relatively few people with

limited education, who are more likely than their better-educated counterparts to suffer from health

problems and work in physically demanding jobs, have extended their careers.

◼ Among nondisabled workers in their early fifties, 46 percent of those who did not complete

high school and 40 percent of those with no more than a high school diploma developed a work

disability by age 65, compared with 24 percent of those with a four-year college degree.

◼ In 2014, 49 percent of workers ages 55 to 65 who did not attend college reported that their job

requires substantial physical effort, compared with 26 percent of those who attended college.

Because people with health problems often fall through the disability safety net, early Social

Security retirement benefits pull many older people with health problems out of poverty, especially

those with limited education. Our analysis followed people who were ages 50 to 54 and did not report

any health-related work limitations at that age but developed a work limitation before age 62. The

likelihood that members of this sample have incomes below 100 percent of the federal poverty level

rises as they approach age 62, and then falls once they turn 62 and qualify for Social Security retirement

benefits. For adults who did not complete high school, poverty rates increase from 18 percent at ages

50 to 53 to 35 percent at ages 58 to 61; they then decline to 23 percent at ages 62 to 65 and 20 percent

at ages 66 to 68. Patterns are similar, but much less dramatic, for adults with more education.

Possible Options to Protect Vulnerable Older Adults

Raising the EEA without making other policy changes to protect people who are unable to work until

they qualify for retirement benefits could create significant economic hardship. Additional policy

reforms could mitigate the financial impact of raising the EEA for some retirees, but it seems unlikely

they could fully protect all vulnerable older adults. More thoroughly evaluating the health status of

older adults with potential disabilities and providing cash benefits in a timely manner to everyone who

cannot work—and only to those who cannot work—is a laudable goal, but it is difficult and expensive to

implement. A more realistic approach is to grant special benefits to certain groups, such as those in

v i i i E X E C U T I V E S U M M A R Y

hazardous or arduous occupations. However, these groups would likely include many people who can

work and exclude many who cannot work, so targeting benefits to them would not be an efficient use of

scarce public resources.

Some more modest reforms that could ease the transition to a higher EEA may be warranted. The

Supplemental Security Income program provides cash benefits to people with low incomes and very few

resources, but it is available to people without disabilities only after they turn 65. Reducing the

Supplemental Security Income eligibility age to 62 for people without disabilities would provide a safety

net for those who lose access to Social Security retirement benefits at age 62. Modernizing

Supplemental Security Income by instituting a more realistic resource test and improving benefits levels

could provide meaningful protection. Expanding government employment and training services could

improve employment prospects for older adults. Policymakers should also consider reforming the Social

Security Disability Insurance program to encourage employers to better accommodate workers with

disabilities and promote their rehabilitation. Further, it may be time to consider providing partial

disability benefits to workers who are not completely disabled.

Policymakers could also reform other aspects of Social Security to make the retirement program

more progressive and offset some of the financial losses that increasing the EEA would impose on low-

income retirees. The recent life expectancy gains that have benefited the overall population have

largely eluded people in the bottom portions of the economic distribution. Consequently, raising the

EEA would make retirements for lower-income people shorter for those who retire over the coming

decades than for those who retired a few decades ago. Changes such as creating a meaningful minimum

benefit or raising the share of lifetime earnings that Social Security benefits replace for lower-income

beneficiaries could maintain the lifetime value of their retirement benefits.

I S I T T I M E T O R A I S E T H E S O C I A L S E C U R I T Y R E T I R E M E N T A G E ? 1

Is It Time to Raise the Social Security

Retirement Age? Social Security faces a long-term financing problem. Under the existing tax and benefit structure, the

system’s trustees project that annual revenues will fall short of annual costs this year and never

recover, as millions of baby boomers collect benefits and people live longer (Board of Trustees 2018).

Although the system has built up a substantial trust fund that can cover revenue shortfalls for more

than a decade, the trustees project, based on their intermediate assumptions, that the trust fund will be

depleted in 2034, after which revenues will be able to cover only about three-quarters of scheduled

benefits.

There are three ways to fix Social Security’s financing problems (Favreault, Johnson, and Smith

forthcoming). Policymakers could raise revenues, such as by increasing the payroll tax rate that funds

the system or boosting the share of earnings subject to the payroll tax. In 2018, Social Security’s payroll

tax is levied only on the first $128,400 of earnings, less than 85 percent of all wage and salary income

received in the United States. Expanding the tax base to cover 90 percent of all earnings (as it did in

1983) would raise the taxable maximum to about $260,000 today and, if benefits were not paid on

these additional taxes, would eliminate about one-third of the long-term funding gap.1

A second option is to cut monthly benefits paid to retirees. Examples of this approach featured in

prominent reform proposals include reducing cost-of-living adjustments after retirees begin collecting,

adjusting the benefit formula (but perhaps protecting low-income retirees), and tying future benefit

growth to the change in prices instead of average wages (which generally increase more rapidly).

The third option for bolstering Social Security’s finances, and the subject of this report, is to reduce

the period over which benefits are paid by raising the age at which people can begin collecting

payments. Retired workers may now begin collecting Social Security retirement benefits at age 62, the

program’s early eligibility age (EEA). As average life spans have lengthened and work ability has

improved, some policymakers and analysts have recommended making people wait to claim retirement

benefits. By raising both the EEA and Social Security’s full retirement age (FRA), which is now 67 for

people born in 1960 and later, the program could pay the same monthly benefits as it does now but

restrict them to older beneficiaries. This policy could maintain annual retirement benefits for truly old

people while cutting Social Security costs. Raising the retirement age would also encourage many older

people to work longer, increasing income tax revenue for federal and state governments. The Social

2 I S I T T I M E T O R A I S E T H E S O C I A L S E C U R I T Y R E T I R E M E N T A G E ?

Security actuaries estimate that slowly increasing the EEA and FRA by three years, beginning in 2022,

would eliminate about one-quarter of the program’s long-term funding shortfall.2

But raising the retirement age could create hardship for some retirees. Many Americans in their

early sixties have health problems that limit their work ability. Disability insurance provides income

support to many people with the most serious health problems, but many others with limited work

capacity are unable to pass the program’s strict medical and functional screens. This problem may be

especially serious for older workers with little education in physically demanding jobs. Employer

reluctance to hire older workers also limits employment opportunities at older ages, forcing many older

workers laid off from their jobs to collect Social Security as early as possible. In addition, less-educated,

lower-income older adults have not experienced many recent gains in life expectancy, which went

mostly to people with more education and income.

This report examines how increasing Social Security’s EEA might affect beneficiaries and discusses

different ways of protecting those adults who might not be able to work until qualifying for Social

Security benefits. Possible options include exempting certain groups from the increase (such as those in

physically demanding occupations) or making other aspects of Social Security more progressive to

offset the EEA increase. Alternatively, programs outside the Social Security retirement system could be

reformed to provide additional protection, such as by bolstering disability benefits, extending

unemployment benefits for older adults, or expanding cash assistance to low-income seniors. Our

discussion draws from a careful synthesis of the literature and the results of new analyses of several

household surveys: the American Community Survey, 1980 Decennial Census, Annual Social and

Economic Supplement of the Current Population Survey, Health and Retirement Study (HRS), National

Health Interview Survey (NHIS), and Survey of Income and Program Participation.3 We evaluate trends

and disparities in life expectancy, health status, job demands, labor market conditions for older workers,

and Social Security benefits claiming behavior. We also examine the effectiveness of the disability

safety net and growing economic inequality at older ages.

Despite significant growth in overall life expectancy over the past half century, there is little

evidence that work ability for people in their early and mid-sixties has improved much over the past two

decades. Declines in disability rates have stalled and may have reversed, and obesity rates have

increased. Physically demanding jobs remain commonplace, even for older workers, and the labor

market is often hostile to older adults because employers are often reluctant to hire older workers.

Delaying retirement is especially challenging for older people with limited education, who

disproportionately experience health problems and work in physically demanding jobs. Raising the EEA


without making other policy changes to protect people who are unable to work until they qualify for

retirement benefits could create significant economic hardship.

Social Security’s Retirement Ages

Although Social Security originally had a single retirement age, it now allows retirees to choose a

retirement age between 62 and 70 (down to the month) and ties monthly payments to the chosen

retirement age. When Social Security was enacted in 1935, benefits began at age 65. Starting in 1956

for women and 1961 for men, retirees could begin collecting as early as age 62, but the program

permanently reduced their monthly benefits by 0.56 percent for each month they took up benefits

before age 65.4 Before 2000, retirees who began collecting benefits on their 62nd birthday (36 months

early) received only 80 percent of the full monthly benefits that they would have received if they had

waited until age 65 to take up benefits. The reduction in monthly benefits for early retirees offsets the

additional payments they receive by collecting early and was designed to be actuarially fair, so that

expected lifetime payments would not change if they collected early or at the FRA.

In the 1970s, Congress increased monthly benefits for those who delayed claiming beyond the FRA,

although the increases were small and did not fully offset the fewer payments received by late claimers.

The 1972 Social Security amendments increased benefits only 0.083 percent for each month (up to age

72) they waited past their 65th birthday to begin collecting, or 1 percent a year. The 1977 amendments

increased the bonus for delayed claiming to 0.25 percent per month of delay (or 3 percent a year).

The 1983 Social Security amendments raised the FRA for the first time in the system’s history but

did not change the EEA. The legislation increased the FRA to 65 and a few months for those born

between 1938 and 1942 (who turned 62 between 2000 and 2004), 66 for those born between 1943

and 1954, 66 and a few months for those born between 1955 and 1959, and 67 for those born in 1960

and later. (The FRA remained 65 for those born before 1938.) Retirees can still claim as early as age 62,

but early claimers now face a stiffer actuarial reduction than those who retired when the FRA was 65.

Monthly benefits are now reduced 0.56 percent for each month retirees claim before the FRA (or 6.67

percent a year) for the first 36 months, and 0.4167 percent a month (or 5 percent a year) for the next 24

months. Consequently, retirees born in 1960 (who face an FRA of 67) receive 70 percent of their full

benefits if they claim at age 62 instead of the 80 percent share they would have received had the FRA

not increased. The FRA increase, then, is equivalent to a benefit cut.


The 1983 amendments also boosted the rewards for delayed claiming beyond the FRA. The delayed

retirement credit, as it is known, gradually increased from 0.25 percent a month (or 3 percent a year) for

those born before 1925 to 0.67 percent a month (or 8 percent a year) for those born in 1943 or later.

These adjustments were designed to improve actuarial fairness, so that lifetime benefit payments do

not fall when retirees decide to claim benefits later. Consequently, the 1983 amendments increased

retirement benefits for those who wait two or more years after the FRA to claim Social Security

benefits. For example, retirees who postpone benefit take-up until age 69 would receive 112 percent of

their full benefits if they claimed under the rules in force before the 1983 amendments, compared with

124 percent for those who face an FRA of 66 and 116 percent for those who face an FRA of 67.

However, the 1983 amendments capped the delayed retirement credit at age 70, whereas the old rules

continued the credit until age 72.

FIGURE 1

Monthly Social Security Benefits as a Percentage of Full Benefits

By claiming age and birth year

URBAN INSTITUTE

Source: Author’s calculations from SSA (2017b).

65

75

85

95

105

115

125

135

62 63 64 65 66 67 68 69 70 71 72

Claiming age

1939

1922

1960

1957

1937

Percentage


Consequently, Social Security now has 97 different monthly retirement ages, running from age 62

and zero months to age 70 and zero months, each of which pays a different monthly benefit.5 Figure 1

shows how monthly retirement benefits, as a percentage of the full benefit, vary by claiming age for

selected birth cohorts. (Table A.1 reports monthly benefits by claiming age for all birth cohorts from

1922 to 1960.) Benefits paid at age 62 fall from 80 percent of full benefits for those born in 1937 or

earlier to 70 percent for those born in 1960 or later. For those who wait until age 67 to collect, benefits

increase from 102 percent for those born in 1922 to 113 percent for those born in 1937 and then

decline to 100 percent for those born in 1960 or later. Beneficiaries who wait until age 70 to claim

receive 105 percent of full monthly benefits if they are born in 1922, 132.67 percent if they are born in

1939 (when age 70 benefits peak), and 124 percent if they are born in 1960 or later.

Pros and Cons of Raising the Retirement Age

The principal rationale for raising Social Security’s retirement ages is to reduce the duration of benefit

payments and thus cut program costs. Social Security’s current structure, however, requires

policymakers to raise both the EEA and FRA to reduce costs by shortening the benefit period.

Increasing the EEA but not the FRA shortens the benefit period but does not lower costs much because

the program actuarially adjusts benefits received by those who claim early. Raising the EEA to 64, for

example, would reduce the number of monthly payments to retirees who would otherwise claim at ages

62 or 63, but these beneficiaries would receive larger payments each month, leaving their expected

lifetime benefits unchanged.6 Increasing the FRA but not the EEA would reduce costs by cutting

benefits, but it would not necessarily shorten the benefit period because many people would likely

collect benefits at the same age as they would under the lower FRA and simply accept lower monthly

payments.7 Raising only the FRA would also increase the financial penalty on early retirement, leaving

people who collect benefits when they first qualify even further behind in old age. Raising the EEA and

FRA together, as recommended by the National Commission on Fiscal Responsibility and Reform

(2010) and others, would both shorten the benefit period and reduce program costs. If the EEA and FRA

were each increased by two years, for example, beneficiaries who choose to retire as early as possible

would begin collecting benefits two years later but would receive the same monthly benefits as under

the former retirement ages, reducing their lifetime benefits.

Advocates of increasing the EEA note that Americans are living longer and are better able to work

at older ages than ever before. As life spans lengthen, starting an old-age income support program at

age 62 no longer makes sense, they argue, because 62-year-olds who can expect, on average, to live for


another two decades are too young to collect retirement benefits. Forcing people to work longer by

raising the EEA would concentrate retirement benefits among people who are more likely to be too old

to work. Moreover, health improvements and changes in the workplace allow more adults in their early

and mid-sixties to work today than in the past. Raising the EEA would also encourage many people to

work longer, increasing income tax revenue for federal and state governments (Butrica, Smith, and

Steuerle 2006). And raising retirement ages would not affect those people collecting disability benefits

who are among the least able to work.

Critics of raising the EEA note that gains in life expectancy, health status, and employability have

not been equally distributed across the population. They contend that many Americans in their early

and mid-sixties continue to suffer from health problems that limit their work ability. Working longer is

particularly difficult for those with limited education in physically demanding jobs. Although the

disability safety net is designed to support adults with health problems who cannot work, many people

near retirement age who report work limitations do not receive assistance. Moreover, many older

adults who are willing and able to work are unable to find jobs. Limited employment prospects are

particularly problematic for less-educated older workers whose skills have become outdated over time.

Raising the Social Security retirement ages would exacerbate the challenges they face.

Both sides can find support for their views in the available evidence. On average, older Americans

live several years longer than they did when the existing EEA was introduced, and life expectancy is

projected to continue to increase. Fewer older adults report health problems today than 25 years ago,

and fewer workers hold physically demanding jobs. However, recent mortality gains have been

concentrated among well-educated, high-earning groups. Health status for adults in their fifties and

sixties has not improved much over the past two decades (and may have worsened), and the imperfect

public disability safety net allows many people with health problems to fall into poverty. Moreover,

many employers seem reluctant to hire older workers, limiting employment prospects at older ages.

The following sections examine in more detail trends and disparities in life expectancy, health

status, job demands, and Social Security claiming behavior. It also examines the effectiveness of the

disability safety net and growing economic inequality at older ages.

Mortality

Since Congress first allowed retirees to begin collecting early retirement benefits at age 62, life

expectancy has increased substantially. Between 1960 and 2015, remaining life expectancy at age 62

increased 5.4 years for men (to 20.0 years) and 4.8 years for women (to 22.8 years; figure 2). Social


Security’s trustees, using their intermediate assumptions, project that by 2050, life expectancy will

grow another 2.8 years for men (to 22.8 years) and 2.4 years for women (to 25.2 years). Thus, if the EEA

increased from 62 to 65 in 2050, people who retired at the EEA in 2050 would spend about as many

years in retirement as those who retire at the EEA today and between four and five more years in

retirement (depending on their sex) than those who retired at age 62 in 1960.

FIGURE 2

Remaining Life Expectancy at Age 62 by Sex, 1960–2050

URBAN INSTITUTE

Source: SSA (2018).

Note: Projections are based on the Social Security trustees’ intermediate projections.

These projections indicate that men who stop working at age 62 in 2050 can expect to spend 56

percent more time in retirement than their counterparts who stopped working at that age in 1960;

women who retire early in 2050 can expect to spend 40 percent more time in retirement than their

1960 counterparts. In 2050, retirement that begins at age 62 will consume, on average, 34 percent of

men’s adult lifetime and 36 percent of women’s adult lifetime (defined as after age 18). Retirements in

2050 that were delayed three years, to age 65, would consume 30 percent of an adult life for men and

32 percent for women. In 1960, by contrast, retirement that began at 62 consumed only 25 percent of

an adult life for men and 29 percent for women.

0

5

10

15

20

25

30

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Years

Women

Men


Projecting life expectancy is difficult, and the Social Security trustees have consistently assumed

slower rates of improvement than many experts recommend (2015 Technical Panel on Assumptions

and Methods 2015). Although the Social Security trustees’ intermediate assumptions imply smaller

gains in life expectancy over the next 35 years than have occurred over the past 35 years, the

projections show significant mortality declines over coming decades. However, life expectancy dropped

in 2015 (Xu et al. 2016), its first decline since 1993 during the height of the AIDS epidemic (Arias,

Heron, and Xu 2016). Life expectancy fell again in 2016 (Kochanek et al. 2017), the first time in more

than 50 years it declined in consecutive years. These declines were driven by an increase in mortality at

younger ages and may be temporary setbacks driven by spikes in opioid drug overdoses and suicides

(Ahmad et al. 2018; Hedegaard, Curtin, and Warner 2018). Mortality rates in the United States for non-

Hispanic whites ages 45 to 54 increased between 1998 and 2015, although they continued to fall for

other racial and ethnic groups (Case and Deaton 2015, 2017). Life expectancy at age 65, however,

remained constant in 2015 and increased in 2016 (Kochanek et al. 2017; Xu et al. 2016).

People with more education and earnings tend to live longer than those with less. At age 25, US

adults who did not complete high school can expect to die nine years sooner than college graduates

(National Center for Health Statistics 2012). Comparing life expectancy at birth in the United States in

2008 by race and education, Olshansky and colleagues (2012) found that white men with 16 or more

years of schooling could expect to live 14.2 years more than black men with fewer than 12 years of

schooling, and white women with 16 or more years of schooling could expect to live 10.3 years more

than black women with fewer than 12 years of schooling. In an innovative study, Buckles and colleagues

(2016) took advantage of the variation in college attendance that arose from draft avoidance during the

Vietnam War to control for self-selection into college. They concluded that graduating from college

reduced mortality rates more than 50 percent.

Longevity disparities by socioeconomic status appear to be growing. Mortality rates increased

between 1999 and 2015 for non-Hispanic whites who never attended college but not for those who

attended college (Case and Deaton 2017). Between the 1980s and 2000, life expectancy gains occurred

nearly exclusively among people who completed at least 13 years of education, partly because better-

educated people were more likely to give up smoking (Meara, Richards, and Cutler 2008). Chetty and

colleagues (2016) found that the negative relationship between income and mortality rates, estimated

from tax records and Social Security Administration (SSA) death records, strengthened between 2001

and 2014. Singh and Siahpush (2006) found that life expectancy at birth was 4.5 years higher in the

most privileged counties, based on educational opportunities, labor force skills, economic status, and

housing conditions, than in the most deprived counties in 2000. Twenty years earlier, that gap was only


2.8 years. Some counties even experienced a drop in life expectancy between 2000 and 2007 (Kulkarni

et al. 2011).

My discussion so far has focused on life expectancy at birth or at age 25 or mortality throughout the

life span. However, socioeconomic differences in longevity persist into old age. Using Social Security

records, Waldron (2007) examined how life expectancy at older ages varies with average lifetime

monthly earnings. She estimated that among people born in 1941, those in the top half of the lifetime

earnings distribution could expect to live another 21.5 years after age 65, whereas those in the bottom

half of the lifetime earnings distribution could expect to live only another 16.1 years (figure 3). Her

estimated longevity gap between high and low earners has grown substantially over time. For members

of the 1912 birth cohort, who turned 65 in 1977, the difference in remaining life expectancy between

the top and bottom halves of the earnings distribution was only 0.7 years, compared with 5.3 years for

members of the 1941 birth cohort, who turned age 65 in 2006. Nearly all the gains in remaining life

expectancy over the 29-year period went to people in the top half of the lifetime earnings distribution,

who experienced a six-year increase; life expectancy rose barely one year for those in the bottom half.

FIGURE 3

Remaining Life Expectancy at Age 65 by Average Lifetime Monthly Earnings and Birth Cohort

URBAN INSTITUTE

Source: Waldron (2007).

Note: The analysis ranks people based on their average indexed monthly earnings in their 35 top-earning years.

0

5

10

15

20

25

1912 1922 1932 1941

Years

Birth cohort

Top half

Bottom

half

1 0 I S I T T I M E T O R A I S E T H E S O C I A L S E C U R I T Y R E T I R E M E N T A G E ?

Another mortality study using Social Security records confirms the connection between

socioeconomic status and mortality at older ages but finds less evidence that the connection has

strengthened over the past two decades. Bosley, Morris, and Glen (2018) divided Social Security

beneficiaries born in 1930 and later into lifetime earnings quintiles by sex and birth cohort. They found

that mortality rates at age 62 and older declined steadily as lifetime earnings increased. In 1995,

mortality rates were 65 percent higher for men in the bottom fifth of lifetime earnings than for men

overall; mortality rates were 41 percent lower for men in the top fifth of lifetime earnings than for men

overall (figure 4). Excess mortality for low-earning men increased between 1995 and 2005 and declined

between 2005 and 2015. Similarly, high-earning men’s longevity advantage increased between 1995

and 2005 and fell over the next decade. Nonetheless, the mortality rate at ages 62 to 64 for men in the

bottom fifth of the lifetime earnings distribution, relative to the overall rate for men in that age group,

was higher in 2015 than 1995, and the relative mortality rate for men in the top fifth of the lifetime

earnings distribution was lower in 2015 than 1995. Over the 20-year period, the mortality rate gap

between men in the bottom and top fifths of the lifetime earnings distribution increased 22 percent.

FIGURE 4

Relative Mortality Ratios at Ages 62 to 64 for Men, 1995–2015

By average lifetime monthly earnings

URBAN INSTITUTE

Source: Bosley, Morris, and Glenn (2018).

Notes: The relative mortality ratio is the mortality rate in a given lifetime earnings quintile, divided by the mortality rate for all

men combined. The analysis categorizes men based on their average indexed monthly earnings in their 35 top-earning years.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1995 2000 2005 2010 2015

Bottom fifth of earners Top fifth of earners

I S I T T I M E T O R A I S E T H E S O C I A L S E C U R I T Y R E T I R E M E N T A G E ? 1 1

Bosley, Morris, and Glenn (2018) also found that women’s lifetime earnings and mortality were

negatively related, but the relationship was weaker for women than men. In 1995, women in the bottom

fifth of the gender-specific lifetime earnings distribution were 41 percent more likely to die at ages 62

to 64 than woman overall; those in the top fifth of the lifetime earnings distribution were 19 percent

less likely to die than women overall (figure 5). Mortality may be less correlated with lifetime earnings

for women than for men because well-educated, high-wage women sometimes withdraw from the labor

force to care for children or frail parents, reducing their lifetime earnings (Goldin and Mitchell 2017).

However, the lifetime-earnings gap in mortality increased steadily for women between 1995 and 2015,

growing 21 percent over the period. For both men and women, the relationship between lifetime

earnings and mortality weakens as older adults age.8

FIGURE 5

Relative Mortality Ratios at Ages 62 to 64 for Women, 1995–2015

By average lifetime monthly earnings

URBAN INSTITUTE

Source: Bosley, Morris, and Glenn (2018).

Notes: The relative mortality ratio is the mortality rate in a given lifetime earnings quintile, divided by the mortality rate for all

women combined. The analysis categorizes men based on their average indexed monthly earnings in their 35 top-earning years.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1995 2000 2005 2010 2015

Bottom fifth of earners Top fifth of earners


Health Status

Health status is an important predictor of work ability and the capacity to delay retirement. Improving

health could cushion the impact of an increase in Social Security’s retirement ages on older adults. Health

status correlates with life expectancy, but higher life expectancy does not guarantee better health in one’s

late fifties or early sixties. As people live longer, they may spend more time with health problems.

Health problems become more frequent as adults age, but older Americans are generally healthier

today than they were four decades ago. Between 1972 and 2017, the share of adults reporting fair or

poor health fell from 25.5 to 18.3 percent at ages 55 to 61 and from 28.6 to 19.1 percent at ages 62 to

65 (figure 6).9 Most of these improvements occurred before 2000, however. Between 2000 and 2017,

the share of adults reporting fair or poor health fell only 0.9 percentage points at ages 62 to 65 and

increased 1.1 percentage points at ages 55 to 61. Thus, it is not clear how health status will change in

coming decades.

FIGURE 6

Percentage of Adults Reporting Fair or Poor Heath, 1972–2017

By age

URBAN INSTITUTE

Source: Author’s calculations from the National Health Interview Survey.

0

5

10

15

20

25

30

35

40

1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

45–54

55–61

62–6566–69


Several household surveys ask respondents about the presence of health problems that limit

employment options.10 As with the prevalence of fair or poor overall health, there is not much evidence

that the prevalence of work limitations has declined much over the past two decades. Between 1997

and 2017, the share of adults who reported a health-related work limitation fluctuated between 16.1

and 18.6 percent at ages 55 to 61 and between 18.4 and 22.2 percent at ages 62 to 65 (figure 7).

FIGURE 7

Percentage of Adults Reporting Health-Related Work Limitations, 1997–2017

By age

URBAN INSTITUTE


Several studies confirm that health status is no longer improving in midlife and may be worsening.

Using data from the NHIS, Crimmins, Reynolds, and Saito (1999) report that the share of both men and

women ages 62 to 69 with work limitations declined significantly between 1982 and 1993, but

Reynolds and Crimmins (2010) find much smaller declines in work limitation rates for that age group

between 1997 and 2007. Martin and colleagues (2009), also using NHIS data, find that the share of

adults ages 40 to 59 reporting fair or poor health fell from 1983 to 1998 but did not change significantly

between 1998 and 2006. Other studies find little change in disability rates for working-age adults

between 1984 and 2010 (Kaye 2013) or in the average number of functional impairments reported by

men and women at ages 51 to 56 between 1992 and 2004 (Weir 2007). Some evidence points to recent

0

5

10

15

20

25

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

45–54

55–61

62–6566–69


increases in disability at midlife. The share of people in their forties and fifties who need assistance with

personal care or other routine activities inched up between 1984 and 1996 (Lakdawalla, Bhattacharya,

and Goldman 2004) and between 1997 and 2007 (Martin et al. 2010), and functional impairments

among men and women ages 51 to 56 were much more common in 2004 than 1992 (Soldo et al. 2007).

In addition, Chen and Sloan (2015) find significant increases between 1996 and 2010 in the percentage

of adults ages 59 to 64 reporting (1) limitations in activities of daily living (such as bathing, eating, and

dressing) and instrumental activities of daily living (such as shopping and preparing meals), (2) mobility

limitations, and (3) difficulty with activities involving large muscle groups (such as pulling or pushing

large objects).

Obesity accounts for much of the growth (or lack of reduction) in disability for older working-age

adults (Bhattacharya, Choudhry, and Lakdawalla 2008; Chen and Sloan 2015; Sturm, Ringel, and

Andreyeva 2004). Chronic medical conditions have also become more prevalent at midlife (Martin et al.

2009), and they tend to correlate with disability, although that relationship may be weakening (Chen

and Sloan 2015). Bhattacharya, Choudhry, and Lakdawalla (2008) find that disability rates have

declined among working-age adults without chronic conditions. Other trends among middle-aged

adults, such as reduced smoking (Jamal et al. 2015), improved educational attainment (Crimmins,

Reynolds, and Saito 1999), and increased physical activity (National Center for Health Statistics 2017),

have improved health status at midlife, but not enough to offset the debilitating effects of obesity (Chen

and Sloan 2015).

Given the strong connection between obesity and disability, future trends in obesity rates will

affect the work ability of adults in their early and mid-sixties in coming decades. Between 2000 and

2016, the share of adults who were obese rose from 30.5 to 39.8 percent (Hales et al. 2017).11 In 2016,

the obesity rate reached 42.8 percent for adults ages 40 to 59. Rates were even higher among African

Americans and Hispanics. Much of the growth in obesity arises from changes in the global food system,

which is producing more processed, affordable, and marketed food than ever before (Swinburn et al.

2011), creating social environments that promote obesity. Obesity also often leads to diabetes, which

has increased in prevalence sharply since 1990 (Cheng et al. 2013; Geiss et al. 2014, 2017). Some

evidence suggests that obesity growth rates are slowing, which could improve work ability. Controlling

for age, race, Hispanic origin, smoking status, and education, Flegal and colleagues (2016) find that

obesity prevalence did not change significantly for men between 2005 and 2014, although it did

increase for adult women.

Among older people, health problems are concentrated among people of color and people with

limited education, not evenly distributed throughout the population (Centers for Disease Control and


Prevention 2013; Fuller-Thomson et al. 2009; Goldman and Smith 2011; Woolf et al. 2015;

Zimmerman, Woolf, and Haley 2015). At ages 62 to 65, 27 percent of non-Hispanic black people and 26

percent of Hispanic people reported health-related work limitations, compared with 19 percent of non-

Hispanic white people (figure 8). Relative to their counterparts who completed four years of college,

people in their early to mid-sixties who completed only high school are more than twice as likely to have

a health-related work limitation, and those who did not complete high school are nearly four times as

likely. Recent research suggests that chronic conditions are more likely to be disabling for people of

color than for non-Hispanic whites (Lennox, Taylor, and Rogers 2018). Socioeconomic status, which

appears to drive much of the racial disparities in health outcomes (Fuller-Thomson et al. 2009), affects

health status because it shapes access to health care, knowledge of healthy behaviors, and social

environments that can promote or impair health (Phelan and Link 2005).

FIGURE 8

Percentage of Adults Ages 62 to 65 Reporting Health-Related Work Limitations, 2017

By race and ethnicity and education

URBAN INSTITUTE


Many people develop work disabilities as they age through their fifties and into their mid-sixties.

Following a sample of adults ages 51 to 55 in the HRS who were employed and did not report any work

limitations at that time, we found that 35 percent developed an impairment or health problem by age 65

10

21

25

37

26

27

19

Four or more years of college

Some college, less than four years

High school graduate

Not high school graduate

Hispanic

Non-Hispanic black

Non-Hispanic white


that limited the type or amount of work they could do (figure 9). Incidence rates were higher among

non-Hispanic blacks and workers with limited education. Forty-six percent of workers who did not

complete high school and 40 percent of workers with a high school diploma who did not attend college

developed a work limitation, compared with only 24 percent of workers with a four-year college degree.

FIGURE 9

Probability That Workers Ages 51 to 55 Develop a Health-Related Work Limitation by Age 65 (%)

By age

URBAN INSTITUTE

Source: Author’s calculations from the 1992 to 2018 waves of the Health and Retirement Study.

Notes: Reported probabilities are hazard estimates, computed using the nonparametric Kaplan-Meier estimator for a sample of

6,589 workers ages 51 to 55 in 1992, 1998, or 2004 who were followed until age 65. The analysis defines a limitation as a health

problem that limits the amount or type of work that can be performed, includes only those respondents who were employed at

baseline, and excludes those who reported a limitation at baseline.

Job Demands

The physical demands that a job imposes on workers also help determine whether they can remain

employed at older ages. Older workers may not be able to continue in physically demanding jobs,

especially if they develop health problems. Over the past four decades, the workplace has generally

become less physically demanding. Matching occupational requirements from the US Department of

Labor to census data, Johnson, Mermin, and Resseger (2011) find that between 1971 and 2006, the

0 10 20 30 40 50


Some college, less than four years



Hispanic

Non-Hispanic black

Non-Hispanic white

Women

Men

All

Percentage


share of jobs requiring workers to engage in moderate or strenuous physical activities fell from 57 to 46

percent. Over the same period, the share of jobs requiring physical flexibility or dexterity fell from 36 to

26 percent.

More recent trends in job demands are less encouraging and reveal that many older workers,

especially those with limited education, still face physically demanding workplaces. In 2014, 34 percent

of workers ages 55 to 65 reported that their jobs require “lots of physical effort” all or most of the time

(figure 10). That statistic has barely changed since 1998. Forty-nine percent of workers ages 55 to 65

who did not attend college reported physically demanding jobs in 2014, compared with 26 percent of

workers who attended college. The share of older workers with at least some college education

reporting a physically demanding job increased 5 percentage points between 1998 and 2014.

FIGURE 10

Percentage of Workers Ages 55 to 65 Reporting That Their Job Requires Substantial Physical Effort

By year and education

URBAN INSTITUTE

Source: Author’s calculations from the 1998, 2006, and 2014 waves of the Health and Retirement Study.

Notes: The figure shows the percentage of workers who report that their job requires “lots of physical effort” all or most of the

time. The sample includes 4,463 respondents in 1998, 3,058 in 2006, and 4,134 in 2014.

34

47

21

33

47

24

34

49

26

All Did not attend college Attended college

1998 2006 2014


The share of older workers reporting having to lift heavy loads or stoop, kneel, or crouch on the job

also did not change much between 1998 and 2014 (table 1). Fourteen percent of workers ages 55 to 65

in the HRS said their job requires them to lift heavy loads all or most of the time in 2014, compared with

13 percent in 1998. In 2014, 23 percent of older workers who did not attend college and 10 percent of

those who attended college were employed in jobs that require heavy lifting. The share of older workers

in jobs requiring heavy lifting grew for workers with no more than a high school diploma and for those

who attended college between 1998 and 2014, but it did not increase much overall because educational

attainment rose over the period for older workers. In 2014, 26 percent of workers ages 55 to 65

reported that their job requires stooping, kneeling, or crouching all or most of the time, including 38

percent of those who did not attend college and 21 percent of those who attended college. The high

prevalence of physical job demands among less-educated workers, many of whom have health

problems, could limit their ability to extend their working lives.

TABLE 1

Percentage of Workers Ages 55 to 65 in Jobs That Require

Heavy Lifting or Stooping, Kneeling, or Crouching

By year and education

All Did not attend

college Attended

college

Heaving lifting 1998 13 19 7 2006 15 23 10 2014 14 23 10

Stooping, crouching, kneeling 1998 25 34 16 2006 27 38 20 2014 26 38 21


Notes: The table shows the percentage of workers who report that their job requires lifting heavy loads all or most of the time and

the percentage who report that their job requires stooping, kneeling, or crouching all or most of the time. The sample includes

4,464 respondents in 1998, 3,059 in 2006, and 4,077 in 2014.

Labor Market Conditions for Older Workers

Whether older workers can extend their careers depends on labor market conditions and their ability to

find a job or keep the one they have. A few decades ago, employers may have preferred younger

workers because they were typically better educated than their older counterparts. In 1980, only 12

percent of men ages 62 to 65 had a four-year college degree, compared with 26 percent of men ages 25

to 34 and 24 percent of men ages 35 to 49 (figure 11). Today, however, older men are as well educated

as younger men, boosting their employment prospects. In 2016, 33 percent of men ages 62 to 65 had a


four-year college degree, a slightly higher percentage than for younger men. Older women’s

educational disadvantage relative to younger women has not disappeared, but it has narrowed

considerably. In 2016, 30 percent of women ages 62 to 65 had completed four or more years of college,

compared with 38 percent of women ages 35 to 49.

FIGURE 11

Percentage of Adults with a Four-Year College Degree, by Sex, Age, and Year

URBAN INSTITUTE

Source: Author’s calculations from the 1980 Decennial Census and the 2016 American Community Survey.

JOB LOSS

Nonetheless, many older adults face workplace challenges. Although older workers are less likely than

younger workers to lose their jobs (Johnson and Butrica 2012), job layoffs are common for workers in

their fifties. Using HRS data from 1992 to 2016, we find that employed adults ages 51 to 55 face a 30

percent chance of becoming unemployed by age 65 (figure 12). The risk rises to 36 percent for workers

who did not complete high school and falls for college graduates. Nonetheless, slightly more than one in

four employed workers in their early fifties with a four-year college degree can expect to become

unemployed by age 65.

0 5 10 15 20 25 30 35 40

62–65

50–61

35–49

25–34

62–65

50–61

35–49

25–34

1980 2016

Men

Women


FIGURE 12

Probability That Adults Ages 51 to 55 Become Unemployed by Age 65 (%)

URBAN INSTITUTE


Notes: The figure reports the probability that adults employed at age 51 ever describe themselves as unemployed or having left a

job because of a layoff or business closing between ages 52 and 65. Reported probabilities are hazard estimates, computed using

the nonparametric Kaplan-Meier estimator for a sample of 7,209 workers ages 51 to 55 in 1992, 1998, or 2004 who were

followed until age 65. The analysis includes only those respondents who were employed at baseline.

Older workers generally face especially long unemployment spells when they lose their jobs. Data

from the Bureau of Labor Statistics show that in 2017, unemployed workers ages 55 to 64 were 36

percent more likely to have been out of work for more than six months than those ages 25 to 44.12

Johnson and Smith (forthcoming) find that among workers laid off between 2008 and 2012, 47 percent

of those ages 50 to 61 and 65 percent of those ages 62 and older remained out of work 12 months after

layoff, compared with 35 percent of workers ages 25 to 34 (figure 13). Laid-off workers ages 50 to 61

were 34 percent more likely to be out of work for a full year than their counterparts ages 25 to 34, and

laid-off workers age 62 and older were 86 percent more likely. Why employers are reluctant to hire

older workers is unclear; they may be concerned about the cost of employing older adults (because of

perceived high salary demands or heavy use of expensive health benefits), the cost of training older

adults who may retire before employers can recoup those investments, or the possibility that older

adults may be unfamiliar with the latest technology and lack up-to-date skills (Johnson 2009).

0 5 10 15 20 25 30 35 40


Some college, less than four

years



Hispanic

Non-Hispanic black

Non-Hispanic white

Women

Men

All

Percentage


FIGURE 13

Probability That Laid-off Workers Remain Out of Work 12 Months after Layoff, 2008–12 (%)

By age

URBAN INSTITUTE

Source: Author’s calculations from the 2008 panel of the Survey of Income and Program Participation.

Notes: Reported probabilities are hazard estimates, computed using the nonparametric Kaplan-Meier estimator for a sample of

adults age 25 and older who were employed for at least one full month and then unemployed for at least one full month. Workers

are considered unemployed if they do not hold a job and are on layoff or looking for work. Age is measured at the time workers

become unemployed. The data cover August 2008 to April 2012.

AGE DISCRIMINATION

Regardless of the cause, a majority of older workers believe employers generally treat older workers

unfairly, although relatively few have experienced unfair treatment firsthand. In a 2017 AARP survey of

3,900 adults age 45 and older who were working or looking for work, 61 percent of respondents said

they had seen or experienced age discrimination in the workplace, and 30 percent said they had

experienced it (Perron 2018).13 Perceptions of unfair treatment are similar in the HRS. In 2014, 24

percent of workers ages 58 to 63 reported that their employer favors younger workers in promotion

decisions, up 8 percentage points from 2008 (table 2). The share of older workers who believe that

employers favor younger workers increased across all educational levels and racial and ethnic groups.

Fully 38 percent of older workers who did not complete high school reported in 2014 that their

employers favor younger workers.

35

39

47

65

25–34 35–49 50–61 62+


TABLE 2

Percentage of Workers Ages 58 to 63 Reporting That Their Employers Favor Younger Workers

By year, sex, education, and race and ethnicity

All Men Women

2002 2008 2014 2002 2008 2014 2002 2008 2014

All 16 16 24 19 17 24 14 15 23 Education Did not complete high school 21 25 38 26 34 36 16 15 39 High school graduate 18 15 23 23 19 26 14 13 22 Some college, less than four years 16 12 24 15 13 20 16 12 28 Four or more years of college 12 17 22 14 15 24 11 19 20

Race and ethnicity Non-Hispanic white 15 14 23 18 15 23 13 14 22 African American 20 17 28 25 15 25 17 18 30 Hispanic 19 29 30 18 35 34 19 22 26

Number of observations 1,482 1,179 1,759 620 492 765 862 687 994


Notes: The table shows the percentage of employed respondents who agree or strongly agree with the statement that their

employer “gives younger people preference over older people” in promotion decisions.

Empirical studies have also uncovered evidence of age discrimination in hiring. Correspondence

studies, in which researchers submit fake résumés in response to help-wanted ads, found that older

women, especially those close to retirement age, are less likely than younger women to receive

callbacks from prospective employers (Lahey 2008; Neumark, Burn, and Button, forthcoming).

However, Neumark, Burn, and Button (forthcoming) found much less evidence of age discrimination

against older men. The Age Discrimination in Employment Act protects adults ages 40 and older from

discrimination on the basis of age in hiring, promotion, discharge, compensation, or terms of

employment, but a recent Supreme Court decision makes age discrimination cases harder to prove

(Lipnic 2018). Outdated stereotypes and unconscious bias, rather than blatant discriminatory practices,

appear to account for most employment discrimination against older workers today (Reskin 2000).

LABOR FORCE PARTICIPATION TRENDS

Despite the workplace challenges that sometimes arise at older ages, older adults are working longer

and retiring later. Between 1992 and 2017, the share of men participating in the labor force (working or

actively looking for work) grew from 43 to 56 percent at ages 62 to 65 and from 26 to 37 percent at

ages 66 to 69 (figure 14). In 2017, men ages 62 to 65 were 30 percent more likely to participate in the

labor force than their counterparts 25 years earlier, and men ages 66 to 69 were 42 percent more likely


to participate. Participation rates also increased at age 70 and older. The recent surge in participation

appears to reflect higher educational levels among older workers, changes in Social Security rules that

increased work incentives, and erosion of defined-benefit pension and retiree health insurance

coverage from private-sector employers (Friedberg and Webb 2005; Gustman and Steinmeier 2015;

Johnson, Davidoff, and Perese 2003; Mermin, Johnson, and Murphy 2007; Song and Manchester 2007).

This growth is especially noteworthy because it followed decades of declining labor force participation

by older men. Between 1962 and 1992, male participation rates fell from 71 to 43 percent at ages 62 to

65 and from 41 to 26 percent at ages 66 to 69. Increases in Social Security and employer-sponsored

benefits, which made early retirement more affordable, precipitated the drop in older men’s

participation rates before the mid-1980s (Costa 1998; Samwick 1998).

FIGURE 14

Labor Force Participation Rates for Older Men, 1962–2017 (%)

By age

URBAN INSTITUTE

Source: Author’s calculations from the Annual Social and Economic Supplement of the Current Population Survey.

Notes: The labor force participation rate is the percentage of noninstitutionalized adults working or looking for work.

Unlike labor force participation rates for men age 62 and older, the participation rate for men ages

55 to 61 did not increase over the past two decades: it fell 14 percentage points between 1962 and

1987 and then stabilized. Moreover, labor force participation rates have fallen over the past two

0

10

20

30

40

50

60

70

80

90

100

1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017

70 and

55–61

62–65

66–69


decades for men ages 25 to 54, possibly because employer demand for workers—especially those with

limited education—fell as foreign trade grew, technological advancements accelerated, and the share of

workers possessing the skills employers need shrank, while increased receipt of disability insurance

benefits reduced people’s willingness to work (Aaronson et al. 2014; Abraham and Kearney 2018;

Council of Economic Advisers 2016).

Labor force participation rates have increased more rapidly for older women than older men, partly

reflecting the aging of baby boomer women who have worked more throughout their lives than

previous generations of women. Between 1992 and 2017, the likelihood that a woman participated in

the labor force increased 64 percent at ages 62 to 65 as the participation rate rose from 27 to 45

percent (figure 15). Over the same period, the likelihood that a woman participated in the labor force

grew 70 percent at ages 66 to 69 and 99 percent at ages 70 and older. At ages 55 to 61, women’s

participation rate increased 21 percent.

FIGURE 15

Labor Force Participation Rates for Older Women, 1962–2017 (%)

By age

URBAN INSTITUTE



0

10

20

30

40

50

60

70

1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017

70 and older

55–61

62–65

66–69


Although labor force participation rates at age 62 and older have increased over the past 25 years

for all educational groups, they generally grew faster for those with more education than for those with

less education. Between 1992 and 2017, participation rates at ages 62 to 65 for people who completed

at least four years of college increased 14 percentage points for men and 15 percentage points for

women (figure 16). In contrast, participation rates at those ages for people who did not complete high

school increased only 5 percentage points for men and 6 percentage points for women. However,

participation rates declined over the period for men ages 55 to 61 without a four-year college degree,

falling 10 percentage points for those who did not complete high school and 4 percentage points for

those with a high school diploma who did not earn a four-year college degree.

FIGURE 16

Percentage-Point Change in Labor Force Participation Rates at Ages 55 to 65, 1992–2017

By education, sex, and age

URBAN INSTITUTE



-15

-10

-5

0

5

10

15

20

55–61 62–65 55–61 62–65

Not high school graduate High school graduate, not four-year degree Four-year college degree

Men Women


College graduates are substantially more likely to participate in the labor force at older ages than

those with less education. At ages 62 to 65, 2017 labor force participation rates for adults with a four-

year college degree reached 69 percent for men and 55 percent for women (figure 17). Among adults

ages 62 to 65 without a high school diploma, only 40 percent of men and 25 percent of women

participated in the labor force in 2017.

FIGURE 17

Labor Force Participation Rates for Adults Ages 62 to 65, 2017 (%)

By education and sex

URBAN INSTITUTE



Social Security Benefit Claiming

As more older adults work longer, the share of people collecting Social Security retirement benefits at

the EEA has been falling. Among adults born between 1930 and 1934, who reached age 62 between

1992 and 1996, 57 percent of men and 62 percent of women began collecting Social Security

retirement benefits at age 62 (figure 18). Among adults born between 1943 and 1944, who reached age

62 in 2005 or 2006, only 45 percent of men and 50 percent of women began collecting benefits at age

62. Early take-up of retirement benefits is more common among people with limited education than

40

25

52

43

69

55

Men Women

Not high school graduate High school graduate, not four-year degree Four-year college degree


among those with more education. People with no more than a high school diploma are nearly 20

percentage points more likely to collect Social Security retirement benefits at age 62 than those with a

four-year college degree (Haaga and Johnson 2012). Additionally, those who claim at age 62 tend to

have worse health than those who delay. Li, Hurd, and Loughran (2008) report that 19 percent of those

who claim Social Security retirement benefits at age 62 report health problems that limit their work

ability, compared with only 10 percent of those who claim after age 62.

FIGURE 18

Percentage of Men and Women Collecting Social Security Retirement Benefits at Age 62

By birth cohort

URBAN INSTITUTE

Source: Johnson, Smith, and Haaga (2014), based on data from the 1984–2008 panels of the Survey of Income and Program

Participation linked to administrative benefit and earnings records.

Notes: The sample is restricted to men and women with 40 or more quarters of Social Security–covered earnings who did not

claim retirement benefits before age 62 and who never received Social Security disability benefits.

For retirees who do not collect Social Security at age 62, the likelihood that they claim Social

Security benefits surges when they reach the FRA. Among men born in 1937, who face an FRA of 65, 88

percent of those who are eligible for Social Security retirement benefits and are not already collecting

claimed benefits at age 65 years and zero months (Johnson, Smith, and Haaga 2014). Only 5 percent of

0

10

20

30

40

50

60

70

1920–24 1925–29 1930–34 1935–37 1938–42 1943–44Birth cohort

Women

Men


the remaining nonclaimants began collecting the next two months, and claiming probabilities remained

low in later months. The claiming spike occurred two months later for each of the next five birth cohorts

as the FRA increased two months for each successive cohort. Among men born in 1938, whose FRA is

two months later than those born in 1937, 81 percent of those not already collecting claimed benefits at

age 65 years and two months. Nineteen percent of all nondisabled men born in 1943 and 1944, who

face an FRA of 66, began collecting Social Security retirement benefits at that age, compared with only

1 percent of men born between 1920 and 1942 (Johnson, Smith, and Haaga 2014).

Claiming may surge at the FRA because Social Security beneficiaries are no longer subject to the

retirement earnings test, which forces employed beneficiaries earning more than the exempt amount to

temporarily forfeit some of their retirement benefits, once they reach the FRA. The FRA might also

influence retirement decisions by signaling an “appropriate” time to begin collecting retirement

benefits. Many workers may interpret the government-designated FRA as an implicit endorsement of

retirement at that age. The federal government might be able to encourage some workers to delay

retirement even further with different signals, such as by designating age 70 the FRA, without changing

how benefits are computed.

Disability Safety Net

Some people with health problems who are unable to work until qualifying for Social Security

retirement benefits may be eligible for disability benefits. The disability safety net is designed to

provide income supports for working-age adults who are unable to work because of physical, emotional,

or cognitive impairments. Social Security, in addition to providing retirement benefits, is the primary

payer of disability benefits. Other important public disability programs include workers’ compensation,

which provides benefits to those injured on the job; Supplemental Security Income (SSI), which provides

benefits to very low–income adults with disabilities and, unlike Social Security, does not impose a work

history requirement on beneficiaries; and US Department of Veterans Affairs benefits, which support

veterans with service-related disabilities.

Social Security has offered disability insurance (DI) benefits since 1956, and they are not directly

affected by changes to the FRA or the delayed retirement credit. Adults may receive DI benefits

regardless of age if they are insured and pass the program’s rigorous medical screen.14 Their insurance

status depends on their employment history. Workers must have earned at least one Social Security

credit for each year from age 22 forward, up to age 62. In 2018, they receive one credit for each $1,320

of earnings in covered employment, up to a maximum of four credits per year. Workers must also satisfy


a recency-of-work test, which usually requires that workers have earned at least 20 credits during the

40-quarter period that ends with the quarter in which the disability begins (that is, they must have

worked at least five years over the past decade).15 About 7 in 10 workers were insured by DI in 2016

(Social Security Advisory Board 2017).

Insured workers may file for DI benefits if they have a medically determinable physical or mental

impairment that prevents them from engaging in any substantial gainful activity and that is expected to

result in death or last at least a year. Applicants must demonstrate they are unable to engage in any

substantial paid work, not merely the type of work they did before their disability began. (However, SSA

may consider education when evaluating the disability application; we discuss this in more detail later in

this section.) The first stage in the application process is to determine whether the applicant is currently

earning the substantial gainful activity amount or more, which is set at $1,180 a month in 2018 and

increases each year by the percentage change in Social Security’s national average wage index.16 If so,

the application is denied. About one-third of applications filed in 2015 were denied for technical

reasons, primarily because the applicant earned too much or was not fully insured (SSA 2017a).

The final hurdle in obtaining DI benefits is to pass the disability screen. SSA first determines

whether an impairment is severe enough to significantly limit the claimant’s physical or mental ability to

do basic work activities. If so, the administration determines whether the impairment meets criteria in

Social Security’s listing of impairments, in which case the claimant is deemed disabled and may soon

receive benefits. If not, SSA then determines whether the applicant has the “residual functional

capacity” to perform past relevant work or any other work that exists in the national economy, given his

or her education and work experience. If SSA determines the claimant cannot perform work, even if the

medical condition does not satisfy the listing of impairments, the claimant is deemed disabled.

Musculoskeletal disorders are the most common impairment among DI beneficiaries, accounting for

about one-third of awards in 2013 (Zayatz 2015).

Applicants whose claims are denied may appeal SSA’s decision. The first appeal level is known as

reconsideration. It is a complete review of the claim by a Social Security staffer who was not involved in

the original decision. If unsuccessful at this level, the applicant may request a hearing before an

administrative law judge and then a review by Social Security’s Appeals Council. The final option is to

contest the claim denial in federal district court. For applications submitted in 2008, nearly half of those

denied on medical grounds were appealed (Social Security Advisory Board 2017). Only 10 percent of

appealed denials were overturned at reconsideration, but 63 percent were overturned at the hearing

level or above (Social Security Advisory Board 2017). Overall, 30 percent of all awards were initially

denied on medical grounds and successfully appealed.


Cash benefits may not begin until five months after disability onset, and earnings must not exceed

the substantial gainful activity amount during that period. DI enrollees also begin receiving Medicare

after they have been on DI for 24 months.17 However, because the backlog of disability applications is

long and the appeals process can be lengthy, many applicants wait years to obtain benefits (Social

Security Advisory Board 2017). Others die before a decision on their application has been reached

(Goss, Walsh, and Kestenbaum 2018).

An important feature of DI is that changes to Social Security’s retirement ages do not affect

benefits paid. When beneficiaries reach the FRA, their disability benefits convert to retirement benefits,

but beneficiaries continue to receive the same monthly benefit (plus any relevant cost-of-living

adjustments).

Social Security DI benefits are comparable to retirement benefits. In December 2016, monthly DI

benefits averaged $1,171 (SSA 2017b). By comparison, monthly worker retirement benefits averaged

$1,360 overall and $1,094 for beneficiaries ages 62 to 64, whose payments were reduced because they

claimed benefits before the FRA. For about three-quarters of beneficiaries, annual DI payments replace

less than one-half of the peak annual earnings received in the seven years before benefit receipt, yet

they represent at least 50 percent of family income for nearly half of all beneficiaries and about 7 in 10

unmarried beneficiaries (Favreault, Johnson, and Smith 2013). DI beneficiaries are older and less

educated than the general working-age population. About 6 in 10 DI beneficiaries are ages 55 to 66

(SSA 2017b), and more than one in five adults ages 60 to 64 who did not graduate from high school

received DI benefits in 2010 (Favreault, Johnson, and Smith 2013).

Although DI benefits are a crucial lifeline for those who qualify, many Americans with health

problems appear to fall through the disability safety net. Slightly fewer than half of adults ages 50 to 64

in the bottom fifth of the functional ability distribution ever receive any public disability benefits

(Johnson, Favreault, and Mommaerts 2010). In 2010, 35 percent of adults ages 60 to 64 with disabilities

who did not collect DI benefits were living in poverty (Favreault, Johnson, and Smith 2013).

Given the limitations of DI and the broader disability system, the availability of Social Security

retirement benefits at age 62 provides an important safety net to older working-age people with health

problems. We followed a sample of HRS respondents who were ages 50 to 54 in 1992, 1998, or 2004

and who did not report any health-related work limitations at that age but developed a work limitation

before age 62. The likelihood that members of this sample have incomes below 100 percent of the

federal poverty level rises as they approach age 62, especially for those with limited education, then

falls once they turn 62 and qualify for Social Security retirement benefits (figure 19). For adults who did


not complete high school, poverty rates increase from 18 percent at ages 50 to 53 to 35 percent at ages

58 to 61, then decline to 23 percent at ages 62 to 65 and 20 percent at ages 66 to 68. Patterns are

similar, but much less dramatic, for adults with more education.

FIGURE 19

Percentage of Adults with Income below the Federal Poverty Level, by Age and Education

Adults who develop health-related work limitations before age 62

URBAN INSTITUTE


Notes: The sample consists of respondents ages 50 to 53 in 1992, 1998, or 2004 who are followed until 2014. The analysis is

restricted to adults who do not report any health-related work limitations at baseline but who develop a work limitation before

age 62.

Growing Income Inequality at Older Ages

Employment gains at older ages have raised old-age income inequality as people in good health work,

earn, and save more, leaving those with health problems behind. Between 1996 and 2014, the share of

adults ages 63 to 65 without any health-related work limitations who received meaningful earnings in

0

5

10

15

20

25

30

35

40

50–53 54–57 58–61 62–65 66–68

Did not

graduate

from

Graduated from

high school

Attended

college


the previous year grew 10 percentage points (to 47 percent) among men and 13 percentage points (to

39 percent) among women (figure 20).18 Among those with some health-related work limitations,

however, the share with meaningful earnings in the previous year fell 3 percentage points (to 9 percent)

for men and increased only 1 percentage point (to 8 percent) for women. People with health problems

are less likely to earn meaningful income in their early sixties than people in better health, even when

education, sex, race and ethnicity, and relationship status are held constant (Johnson 2018).

FIGURE 20

Percentage of Adults Ages 63 to 65 with Significant Earnings in the Previous Year, 1996 and 2014

By sex and presence of health-related work limitations

URBAN INSTITUTE

Source: Johnson (2018).

Notes: The analysis, based on data from the HRS, defines significant earnings as $20,000 in 2013 and $11,008 in 1995, the

equivalent amount in wage-indexed dollars, and work limitations as an impairment or health problem that limited the type or

amount of work.

Increased employment among people without health problems in their early and mid-sixties

significantly raised their income over the past two decades. Between 1996 and 2014, median household

income, adjusted for household size and inflation, increased 34 percent (from $46,200 to $62,000) for

adults ages 63 to 65 without any health-related work limitations and 0.3 percent (from $26,600 to

$27,600) for those with some work limitations (figure 21).19 The income shortfalls experienced by

people with health problems in their early sixties are not temporary gaps simply reflecting early

37

12

26

7

47

8

39

8

No work limitations Some work limitations No work limitations Some work limitations

1996 2014

Men Women


retirement and the replacement of labor market earnings with relatively low benefits from Social

Security and employer retirement plans. Instead, they persist throughout later life, as people who

withdraw from the labor force at relatively young ages accumulate less retirement wealth than healthy

people and receive permanently reduced monthly Social Security benefits.

FIGURE 21

Median Household Income in the Previous Year, Adults Ages 63 to 65

By presence of health-related work limitations

URBAN INSTITUTE

Source: Johnson (2018).

Notes: Estimates are reported in inflation-adjusted 2017 dollars. The analysis, based on data from the HRS, defines work

limitations as an impairment or health problem that limited the type or amount of work. The analysis divides married adults’

household income by the square root of two to adjust for the additional resources that married people need relative to single

people while recognizing the efficiency gains of shared living arrangements.

Potential Impact on Workers of Raising the EEA

Several Social Security reform packages proposed over the past 25 years have advocated raising Social

Security’s retirement ages, as summarized in table 3. Some, such as one proposed by the Bipartisan

Policy Center (2016) and the Social Security Retirement Act of 2016 developed by Representative Sam

Johnson (R–TX),20 would raise only the FRA. Others, such as those proposed by Liebman, MacGuineas,

and Samwick (2005) and the National Commission on Fiscal Responsibility and Reform (2010), better

$46,100

$26,600

$62,000

$26,700

No work limitations Some work limitations

1996 2014


known as the Bowles-Simpson Commission, would raise both the FRA and EEA. A disadvantage of

raising the FRA but not the EEA is that doing so could leave the earliest retirees with less than 60

percent of their full benefits, creating significant financial hardship for them, especially because many

early retirees have had relatively low earnings over their careers (Aaron and Reischauer 1998).

TABLE 3

Options to Raise Social Security Retirement Ages in Selected Reform Plans

Proposal FRA EEA

Aaron and Reischauer (1998) Raise the FRA to maintain the 2011 average share of adult life in retirement.

Raise EEA to 64

Advisory Council on Social Security, 1994–1996 (1997), Option 2

Raise the FRA to 67 by 2011, and then begin raising the FRA by an additional 1 month every 2 years to maintain the 2011 average share of adult life in retirement. The FRA would reach age 70 in 2083.

No

Advisory Council on Social Security, 1994–1996 (1997), Option 3

Raise the FRA to 67 by 2011, and then begin raising the FRA by an additional 1 month every 2 years to maintain the 2011 average share of adult life in retirement. The FRA would reach age 70 in 2083.

Raise EEA 1 month every 2 years, starting in 2011. It would reach 65 in 2083.

Bipartisan Policy Center (2016) Raise the FRA 1 month every 2 years, beginning in 2022, until it reaches 69 in 2070, to maintain a constant share of adult life in retirement.

No

Liebman, MacGuineas, and Samwick (2005)

Gradually raise the FRA to 68 by 2017. Raise the EEA 2 months per year, beginning in 2017, until it reaches 65.

National Commission on Fiscal Responsibility and Reform (2010)

Raise the FRA 1 month every 2 years, starting in 2022, until it reaches 69 in 2070, to maintain a constant share of adult life in retirement.

Raise the EEA at the same rate. It would reach 64 in 2070. The proposal would exempt some vulnerable groups.

National Commission on Retirement Policy (1999)

Raise FRA 2 months per year, starting in 2000, until it reaches 70 in 2029. Starting in 2029, raise FRA to maintain a constant number of years in retirement.

Raise EEA until it reaches 65 in 2018. Starting in 2029, raise EEA at the same rate as the FRA.

Rep. Sam Johnson (R-TX), Social Security Retirement Act of 2016

Raise FRA 3 months per year starting in 2023 until it reaches 69 in 2070, to maintain constant share of life in retirement.

No

Sources: Aaron and Reischauer (1998), Advisory Council on Social Security, 1994–1996 (1997), Bipartisan Policy Center (2016),

Liebman, MacGuineas, and Samwick (2005), National Commission on Fiscal Responsibility and Reform (2010), National

Commission on Retirement Policy (1999).

Notes: ERA = early retirement age; FRA = full retirement age. Proposed FRA and EEA increases would apply to people who reach

age 62 in the specified year.


Most proposals to raise Social Security’s retirement ages would gradually increase the EEA to 64 or

65 and the FRA to 69 or 70. Many would also tie future FRA and EEA increases to future changes in life

expectancy to hold steady the share of adult life that workers spend in retirement. If life expectancy

increases one year, for example, these proposals would raise retirement ages by about nine months

(three-quarters of a year) so that people would continue to spend about 25 percent of their adults lives

in retirement. The National Commission on Retirement Policy (1999) proposed the most aggressive

increase in retirement ages, raising the EEA to 65 in 2018 and the FRA to 70 in 2029 and then indexing

both ages to longevity to keep the number of years in retirement constant. Under this proposal, a one-

year increase in life expectancy would raise the FRA and EEA by one year.21

The Social Security actuaries conclude that raising the EEA in tandem with the FRA could

significantly improve the system’s long-term financing. For example, they estimated that increasing

both the EEA and FRA by 36/47 of a month each year, beginning in 2022, until the EEA reaches 65 and

the EEA reaches 70, would eliminate 27 percent of the system’s long-term financial shortfall.22 In 2090,

these increases would reduce annual program costs about 11 percent, with annual spending as a share

of taxable payroll falling from 18 to 16 percent.

The likely impact on beneficiaries from raising the EEA and FRA depends on how workers respond

to the increase. Consider the possible effects of raising the EEA to 65 and the FRA to 70 for adults born

in 1960 and later, three years higher than under current law. Monthly benefit payments would remain

the same as under current law for people who simply wait three years to claim benefits under the new

rules without working, and their lifetime benefits would fall because their payments would last for three

fewer years. Monthly benefits would increase for many people who choose to work in Social Security–

covered jobs for part of the three years they await benefits because the additional employment would

increase their average indexed monthly earnings that determine their Social Security benefits.23

However, some people who would claim benefits after age 62 under current law may not wait three

years to claim benefits. Monthly benefits for this group would fall.

Increases in the retirement age will likely encourage some workers with health problems to apply

for DI. Those who develop disabilities before the EEA and can no longer work face strong incentives to

apply for DI and collect cash payments to offset lost wages before retirement benefits begin. However,

people with health problems can gain financially by collecting DI even after they qualify for early

retirement benefits because DI benefits are not subject to actuarial reductions. In 2018, 62-year-olds,

who face an EEA of 62 and an FRA of 66 years and four months under current law, would collect 36

percent more from Social Security each month, for the rest their lives, by claiming DI benefits instead of

early retirement benefits. The incentive to claim disability increases as the EEA rises (especially with


disability rates growing with age) and as the gap between the EEA and the FRA rises. When the FRA

reaches 67 (as the EEA remains constant), DI benefits will be 43 percent higher than retirement

benefits received by the earliest claimants. However, applicants must pass a strict disability screen to

receive benefits, and the long DI applications backlog forces some beneficiaries to wait months or years

for payments to begin.24

Evidence suggests that the increase in the FRA from 65 to 66 in the first half of the 2000s increased

DI claiming, although the impact has not been dramatic (Bound, Stinebrickner, and Waidmann 2010;

Duggan, Singleton, and Song 2007; Li and Maestas 2008). Li and Maestas, for example, conclude that a

four-month increase in the FRA boosted two-year DI application rates at older ages between just 0.04

and 0.30 percentage points, depending on how they specify their model. Increases in the EEA, however,

could have larger effects because there are few alternatives to DI benefits before the EEA. In a 2002

study for SSA, for example, RAND researchers assume that one-fifth of early claimers would move to DI

if the EEA were raised to 63 (Panis et al. 2002). With about 12 percent of 62-year-olds currently

receiving DI and nearly half of the rest of the Social Security–eligible population currently claiming at

age 62, their assumption implies that the age-62 population receiving DI would grow about 75 percent

if the EEA increased to 62.25

Increasing the EEA could financially harm older adults who cannot work because of physical or

mental impairments but who do not receive DI. Figure 22 uses HRS data to offer some indication of how

many people might be at risk. These calculations assume that people do not become more likely to claim

DI in response to the higher retirement age. In 2014, 51 percent of adults ages 62 to 64 were not

working, about one-half of whom reported a health problem that limited the type or amount of work

they could perform. About one-third of this subgroup received DI, and about one-quarter of those not

on DI were not collecting Social Security retirement benefits. Neither would be affected by an increase

in the EEA. That leaves 11 percent of the population ages 62 to 64 who were not working, had health

problems, and were not collecting DI but were collecting Social Security retirement benefits. Some of

these adults, however, have some wealth they could draw upon to support themselves if they could not

collect Social Security. Further restricting the subsample to those with less than $46,000 in nonhousing

wealth if single or less than $60,000 in nonhousing wealth if married reduces the share at risk to 8

percent. If we consider only those whose most recent jobs were physically demanding or who have not

worked since their early fifties, the share at risk falls to 5 percent.


FIGURE 22

Percentage of Adults Ages 62 to 64 Who Could Face Serious Financial Problems If the EEA Were

Raised to 65

By criteria used to identify at-risk adults

URBAN INSTITUTE

Source: Author’s calculations from the 2014 Health and Retirement Study.

Notes: The analysis classifies respondents as having limited wealth if they hold less than $46,000 in nonhousing wealth if single or

less than $60,000 in nonhousing wealth if married.

Additionally, some people who are willing and able to work but cannot find employment might

struggle financially if the EEA were raised. As noted, older displaced workers generally experience

much longer unemployment spells than their younger counterparts, although they are less likely to lose

their jobs. Between 2000 and 2017, the unemployment rate averaged 4.1 percent for adults ages 62 to

64 compared with 5.2 percent for those ages 25 to 54.26 Given the size of the age-62-to-64 labor force,

this average unemployment rate implies that an additional 68,000 adults might be at risk each year the

EEA is raised. Combining the unemployed with those with health limitations expands the group that

could potentially struggle financially if the EEA were increased. The share increases to about 16 percent

of the age-62-to-64 population if we include all nonworkers with health problems collecting Social

Security retirement but not DI, 10 percent if we eliminate those with at least $50,000 of nonhousing

wealth, and 7 percent if we exclude those whose most recent job was not physically demanding.

Some older unemployed workers might turn increasingly to unemployment insurance benefits if the

EEA were raised. Between 2008 and 2011, only 46 percent of displaced workers age 62 and older

51

25

118

5

Not employed And have health-

related work limitation

And collect Social

Security retirement

benefits

And have limited

wealth

And last job was

physically demanding


received unemployment benefits six months after layoff, compared with 59 percent of those ages 50 to

61 (Johnson and Feng 2013). Eighty-three percent of laid-off workers age 62 and older received Social

Security benefits. Because unemployment benefits typically last no longer than 26 weeks, they do not

generally provide a financially secure bridge to Social Security if the EEA were increased.

Possible Approaches to Protecting Vulnerable

Older Adults If the EEA Rises

Although boosting the EEA without any other policy changes increases the risk of financial hardship for

some older Americans, additional changes might provide some protection. For example, certain

potentially vulnerable groups could be exempt from the increase, or other aspects of Social Security

could be made more progressive to cushion the impact of an EEA increase. Alternatively, modifications

to programs outside the Social Security retirement system could provide additional protection to

vulnerable groups.

Exempt Certain Groups from the EEA Increase

The existing public disability programs exempt some adults who cannot work from the EEA by providing

them with cash benefits before they reach the Social Security retirement age. However, they must first

pass a strict medical screen. The application process is expensive to administer, leads to long delays in

benefit receipt, and is imperfect. Some people with serious work limitations are denied benefits; others

with less serious health problems receive payments. Many rejected applications are subsequently

approved on appeal (Autor and Duggan 2006).

An alternative approach to protecting vulnerable people would be to provide benefits to an easy-

to-identify group of adults composed primarily of those with significant work limitations. One

advantage of this approach is that it can be administered relatively easily because beneficiaries would

not have to be evaluated individually. It would also provide benefits to people who cannot work but do

not have a well-defined medical problem. The disadvantage, of course, is that, some members of the

protected groups may not have serious work limitations. The success of this approach hinges on

whether the group can be defined such that it excludes most people without work limitations.


ALLOW EARLY RETIREMENT FOR WORKERS IN DEMANDING OCCUPATIONS

Social Security treats all covered occupations identically, but many other industrialized countries grant

special retirement privileges to workers in certain demanding occupations. About half of the 36 nations

in the Organisation for Economic Co-operation and Development allow workers engaged in “hazardous

or arduous” employment to collect public retirement benefits at relatively young ages (Zaidi and

Whitehouse 2009). Some countries, like Greece, Spain, and Russia, specify certain occupations that

qualify for early retirement (Turner 2011). In other countries, such as Austria, eligibility for penalty-free

early retirement depends on how much energy workers need to expend in the workplace (Zaidi and

Whitehouse 2009).27 Most nations that grant special retirement privileges to workers in certain

occupations specify a minimum service requirement, such as 10 years of employment within the past 20

years. Other nations impose additional restrictions. In Austria, for example, benefits are available only

to workers in qualifying jobs with low lifetime earnings.

Granting special retirement privileges to workers in certain occupations raises several issues. First,

which jobs should be covered? Some countries cover only a few narrowly defined occupations that

seem clearly to involve arduous working conditions, such as mining, railroad work, and the merchant

marine. Other nations allow workers in many occupations to retire early, perhaps reflecting workers’

political influence as much as workplace conditions. Russia, for example, identifies 13 occupations that

merit special treatment for early retirement (Turner 2011). Greece classifies waiters, hairdressers,

pharmaceutical manufacturing workers, and certain cashiers as arduous occupations.

Because population aging has increased pension costs, however, Greece and other European

countries have begun reducing the number of occupations exempted from the standard retirement age.

France allows partially disabled workers to collect retirement benefits if they can demonstrate that

their disability stems from extended exposure to physically demanding, repetitive, and high-pressure

workplace activities. Eligibility for unreduced early benefits will depend on documentation submitted

by employers on exposure to unhealthy working conditions, not on employment in predetermined

occupations. Requiring this type of documentation, however, increases the cost of administering these

protections.

A drawback of exempting certain occupations from the standard retirement age is that doing so

would subsidize hazardous and arduous work. Standard economic theory maintains that employers set

compensation, or wages and benefits, just high enough to attract enough workers to fill available

positions. Employers must offer higher compensation to entice workers to hazardous, arduous

workplaces from safer, more pleasant work environments. Offering special public retirement benefits

to workers in these occupations could lead employers to reduce the compensation they provide in


wages and retirement and other benefits.28 Subsidizing certain occupations may not be an efficient use

of scarce public resources.

Another drawback of an occupation-based retirement age is that many workers change

occupations as they approach retirement. More than one-quarter of workers moved into new

occupations after age 50 (Johnson, Kawachi, and Lewis 2009). Many such moves are transitions into

less physically demanding work, which could lengthen working lives. Thus, many workers who spent

much of their careers in physically demanding jobs may be able to work at less demanding jobs as they

grow older.

TIE RETIREMENT ELIGIBILITY TO YEARS OF WORK

Another approach to protecting workers who might suffer financially if the EEA were increased would

be to allow workers with many years of covered employment to begin collecting benefits before they

reach the standard EEA. The rationale is that few workers in physically demanding jobs attended

college and thus started their careers right out of high school, before college graduates entered the

workforce. Nearly one-third of Organisation for Economic Co-operation and Development countries

allow workers with 40 years of covered employment to retire earlier than those with 30 years (Turner

2007). The Social Security reform proposal put forth by the National Commission on Fiscal

Responsibility and Reform (2010), or the Bowles-Simpson Commission, also followed this approach.

Under its plan, workers with 25 years of employment and low lifetime earnings would be exempt from

an increase in the EEA. They could continue to collect retirement benefits at age 62 and face the

existing actuarial benefit reduction.29

The drawback of targeting protection to those with long employment histories is that workers with

shorter employment histories often experience more financial hardship. Nearly three-quarters of

retired workers with Social Security benefits below 100 percent of the federal poverty level had been

employed for fewer than 25 years with earnings equivalent to at least half-time work at the federal

minimum wage (Favreault 2010, 2018). Less-educated workers have the shortest careers (Favreault

and Steuerle 2008). Many Social Security beneficiaries with the lowest retired worker benefits had

intermittent employment histories, often because of health problems or child care responsibilities.

Thus, the hardship exemption proposed by the National Commission on Fiscal Responsibility and

Reform (2010), provided to long-term workers with low lifetime earnings, would offer some protection

to low-income workers, but it would not boost retirement benefits for the most vulnerable retirees

(Favreault and Karamcheva 2011).


Make Other Aspects of Social Security More Progressive

Because health problems are more prevalent among those with limited education and earnings and low-

skilled workers have more limited employment opportunities, many older adults unable to work beyond

the existing EEA earn relatively little over their lifetimes. Also, those with limited education and income

tend to die at younger ages than those with more education and income. Consequently, raising the EEA

would likely disproportionately harm low-income retirees.

Policymakers could partly offset the financial consequences for low-income retirees of increasing

the EEA by simultaneously implementing other Social Security changes to reinforce the system’s

progressivity. Social Security already replaces a higher percentage of lifetime earnings for workers with

low lifetime earnings than for those with higher earnings. The benefit formula could be revised to favor

low-earning workers even more. Policymakers could also increase Social Security’s minimum benefit,

boosting payments to workers with limited incomes or low lifetime earnings (Favreault 2009; Herd et

al. 2018). What matters, of course, is how the entire Social Security system (rather than a single

provision, such as the EEA) affects the level and distribution of lifetime benefits.

Although this approach might help preserve lifetime benefits for low-income retirees, it would not

help those who cannot work beyond age 62 make ends meet until reaching the increased EEA. Early

retirees with limited savings could face serious financial hardship. Another drawback is that the

enhanced protection afforded by this approach is not targeted to those who cannot work. Lifetime

earnings is correlated with work ability at older ages, but some older adults with high lifetime earnings

cannot work beyond age 62, and some with low lifetime earnings can extend their careers.

Expand Employment Services and Training

Expanding access to employment services and training opportunities could promote work for older

adults and cushion the impact of raising the EEA. To remain productive, workers must continuously

maintain and update their skills, especially when technology is changing rapidly. Training can provide

employees with access to the best work assignments, improve promotion chances, and promote job

satisfaction and earnings growth. However, training activities are costly. Expenses include both the

opportunity cost of training—employees who are being trained have less time to produce goods and

services than those who are not in training—and the direct costs of trainers’ time and related

equipment.


Employers provide most of the occupational training received by workers. Government, mostly at

the federal level, funds less than one-tenth of all formal training (Mikelson and Nightingale 2004).

However, employers are training fewer workers than in the past (Waddoups 2016), and they appear

reluctant to train older workers. According to a 1995 survey, 51 percent of workers age 55 and older in

large and medium-sized establishments received formal employer-sponsored training during the

previous 12 months, compared with 79 percent of workers ages 25 to 34, 75 percent of workers ages

35 to 44, and 65 percent of workers ages 45 to 55 (Frazis et al. 1998). Older workers also receive less

intensive training. The same survey reveals that workers age 55 and older averaged 17 hours of

informal on-the-job training over six months, compared with 30 hours for those ages 35 to 44 and 39

hours for those ages 44 to 54.

Public funds for workforce development are scarce. Government spending for the Workforce

Investment Act (WIA), which provided federal funding to help train and employ workers, declined

nearly 70 percent between the late 1970s and the mid-2000s (Holzer and Martinson 2008). The

Workforce Innovation and Opportunity Act of 2014 replaced WIA, providing federal funding to “one-

stop career centers” that provide employment and training services. However, funding levels continue

to fall.30

Moreover, the Workforce Innovation and Opportunity Act, like WIA, does not earmark funds for

older workers, leading to fewer services for them (Government Accountability Office 2003). Fewer

than 10 percent of adults who received training under WIA were age 55 and older (Social Policy

Research Associates 2017). Some states are taking additional steps to serve older workers, such as

tailoring employment centers for seniors (Eyster, Johnson, and Toder 2008). The federal government

has experimented with targeting employment services to older adults. In 2009, the US Department of

Labor launched its Taskforce on the Aging of the American Workforce to create pilot programs to help

older workers develop their skills and build capacity within the public workforce investment system to

serve older adults. The initiative funded 10 pilot grants that developed partnerships with employers

and focused on high-growth industries. Although the services provided by each grantee varied, most

programs offered introductory computer skills training, job clubs, case management, and specialized

workshops to build confidence, develop job search skills, and provide peer support. Experience from

these pilot efforts underscored that working closely with employers and offering income supports and

other supportive services to trainees are crucial elements of successful employment programs for older

adults (Kogan et al. 2013).

The Senior Community Service Employment Program is now the only federally funded program

targeted to older adults (Mikelson 2017). Operated by the US Department of Labor’s Employment and


Training Administration, it provides job training in subsidized, part-time community service jobs, and

about one-half of participants transition to unsubsidized employment (Kogan et al. 2012). Only

unemployed adults age 55 and older with incomes below 125 percent of the federal poverty level are

eligible. The program, however, is quite small. With a 2018 budget of $400 million, the Senior

Community Service Employment Program can serve only about 40,000 older adults,31 a tiny fraction of

the eligible population (Kogan et al. 2012). The Trump administration proposed eliminating the Senior

Community Service Employment Program in its fiscal year 2018 and 2019 budgets.

Older adults can also improve job skills and employment practices by enrolling in educational

institutions. Some community colleges have designed offerings especially for older students (Eyster,

Johnson, and Toder 2008; Learning for Action 2015). But older adults who wish to only update their

skills, rather than pursue a formal degree, may have trouble paying for school. Students enrolled in

noncredit programs and those who do not intend to earn a degree, certificate, or other credential are

not generally eligible for Pell grants. Reforms to financial aid programs could help older workers go back

to college. Congress could modify the Pell grant program to make funding available for shorter-term

training, helping older workers update their skills. Expanding tax credits and deductions for education-

related expenses such as transportation, child care, and elder care could also make it easier for older

people to go back to school (Van Horn, Krepcio, and Heidkamp 2015).

To significantly improve employment opportunities for low-skilled older workers, however,

employment and training programs in the US need much more funding (Hanks and Madland 2018).

Some other industrialized nations invest much more heavily in their workforce than the United States.

Norway, for example, emphasizes lifelong learning, and the government offers free courses lasting no

more than 10 months to unemployed workers available to work (Turner, Toft, and Witte 2008).

Strengthen the Safety Net at Older Ages

In addition to reforming the Social Security retirement system to protect vulnerable workers facing an

increase in the EEA, policymakers could strengthen the safety net for older workers outside the

retirement program. Options include extending unemployment insurance, improving means-tested

income supports for older adults, and expanding DI.

EXTENDING UNEMPLOYMENT INSURANCE FOR OLDER WORKERS

As noted, many older displaced workers have trouble becoming reemployed, leading to long

unemployment spells at older ages. When they do find work, older displaced workers generally earn


much less in their new position than in their previous position (Johnson and Mommaerts 2011). Social

Security benefits currently help displaced workers age 62 and older maintain more of their pre-layoff

income than younger displaced workers. Among workers laid off from their jobs between 2008 and

2011, for example, monthly income six months after job loss fell no more than 24 percent below the

pre-layoff level for half of those age 62 and older (Johnson and Feng 2013). By contrast, half of

displaced workers in their fifties experienced income losses of more than 42 percent.

Extending unemployment benefits for older displaced workers—to 52 weeks, for example, instead

of the standard 26 weeks—could mitigate the financial hardship of job loss until Social Security

retirement benefits begin. Several European nations provide special preretirement benefits to older

unemployed workers (Turner 2011). In Spain, unemployed workers may begin receiving public pensions

at age 61. French workers may receive cash benefits if they are reduced to part-time work after age 55.

Although extended unemployment benefits may be justifiable for older adults because they seem to

have special trouble finding work, displaced workers too young to qualify may object to these special

benefits. Another drawback is that generous unemployment benefits discourage the unemployed from

searching for jobs (Johnson and Mommaerts 2011).

IMPROVE SUPPLEMENTAL SECURITY INCOME

The SSI program provides cash benefits to some economically vulnerable disabled and blind Americans

and to those age 65 and older. To qualify for benefits, applicants must pass both an income and resource

test. SSI beneficiaries may hold no more than $2,000 in assets if single or $3,000 if married.32 Federal

SSI benefits are calculated as the difference between the federal benefit rate and countable income.

SSA excludes $20 of income from any source and $65 of earnings when determining the monthly SSI

benefit level. Each dollar in additional earnings increases countable income by 50 cents (although some

earnings are excluded under certain circumstances). Federal benefits cease once countable income

equals the federal benefit rate. The 2018 monthly federal benefit rate is $750 for a single adult and

$1,125 for a couple, well below the federal poverty level. Some states also supplement the federal SSI

payment with a state payment.

In December 2016, 1.2 million adults received federal SSI benefits because of their age, accounting

for 14 percent of all federal SSI recipients (SSA 2017b). Between 1990 and 2016, the number of older

adults awarded federally administered SSI benefits fell 45 percent as the population age 65 and older

grew about 60 percent and the number of blind and disabled awardees grew 25 percent. The program’s

strict asset test, which has not changed since 1989 despite inflation and increases in real wealth,


appears to account for much of the shrinking program participation of the older population (Davies,

Rupp, and Strand 2004).

Expanding SSI could help protect vulnerable retirees from an increase in the EEA. Relaxing the

resource test would allow more seniors to qualify for benefits, and raising the monthly benefit—

currently too low on its own to pull recipients out of poverty—would reduce financial hardship for

beneficiaries. David Stapleton of Mathematica Policy Research has proposed lowering the SSI eligibility

age for aged beneficiaries to 62 if the EEA were raised (Stapleton 2009). This extension would provide a

minimum cash benefit to retirees who would lose their retirement benefits if policymakers were to

increase the EEA.

IMPROVE DI

Perhaps the most direct way to protect older adults who cannot remain in the labor force because of

health problems would be to improve DI. This approach targets people who would be among those most

potentially harmed by an EEA increase. But achieving that difficult-to-reach goal would be expensive.

Each applicant’s health status and work ability would have to be carefully evaluated to ensure that

benefits go to nearly everyone who cannot work and do not go to those can work. Yet disability

evaluations are time consuming and cannot always be objective. Hiring additional medical and

administrative staff to clear the existing application backlog and provide rapid turnaround on future

applications would raise the cost of running the program, which is already under mounting financial

strain (Autor and Duggan 2006).

Other reforms could better protect those with work limitations at older ages. Providing partial

benefits to those partially disabled, as the Veterans Administration and many European countries do,

would help those with more limited disabilities, who receive no protection under the current system

because it pays full benefits only to those unable to work at all. This reform could be expensive, greatly

expanding the number of older adults receiving DI. However, it could be easier to administer than the

current system, whose “all or nothing” award decisions frequently lead to lengthy appeals.

Policymakers could also give more preference in disability award decisions to workers in their late

fifties and early sixties, as some European nations do. The problem, though, is that a lenient DI program

could easily morph into a de facto early retirement program. For example, when the Swedish disability

program began to account for the availability of jobs for older adults, benefit receipt soared. In the late

1990s, about one-third of Swedes ages 60 to 64 received a disability pension (Ebbinghaus 2005).

Policymakers might be able to mitigate this problem by shifting more responsibility for disabled

workers to employers. The Netherlands was able to reduce its disability caseload by requiring


employers to cover the first two years of disability benefits. They must also develop a plan to

rehabilitate and accommodate workers with disabilities (Burkhauser, Daly, and de Jong 2008). In

France, employers must submit to the government a plan to accommodate workers with disabilities and

reduce future exposure to hazardous work (Turner 2011).33

Conclusions

Social Security’s EEA has not changed since it was introduced in 1956 for women and 1961 for men.

Since then, life expectancy at age 62 has increased about five years, and the Social Security trustees

project that it will rise nearly another three years by 2050. If policymakers raised the EEA three years,

to 65, Social Security beneficiaries who collected at that age in 2050 would spend about as many years

in retirement as those who retire today at the current EEA; they would spend between four and five

more years in retirement (depending on their sex) than those who retired at age 62 in 1960. Raising

Social Security’s EEA in tandem with the FRA could significantly reduce program costs, an important

consideration as the program now spends more than it collects each year and the program’s trustees

project that Social Security will be unable to pay full benefits beginning in 2034 (Board of Trustees

2018). And it could encourage many older people to work longer, increasing income tax revenue for

federal and state governments (Butrica, Smith, and Steuerle 2006).

Despite the growth in life expectancy, there is little evidence that work ability for people in their

early and mid-sixties has improved much over the past two decades. Declines in disability rates have

stalled and may have reversed, as obesity rates have increased. Slightly more than one-third of

nondisabled workers in their early fifties develop a health-related work limitation by age 65. Physically

demanding jobs remain commonplace, even for older workers. And many older workers face a hostile

labor market: workers who lose their jobs at older ages face long odds of finding new work, employers

are less likely to call back older job applicants than younger ones, and the share of older workers

reporting that their employers favor younger workers has been rising.

Delaying retirement is especially uncertain for older people with limited education. Although the

share of adults remaining in the labor force in their early and mid-sixties has increased over the past

two decades and the share of retirees collecting Social Security benefits at age 62 has fallen, people

working longer and retiring later are disproportionately college graduates. Relatively few people with

limited education, who are more likely than their better-educated counterparts to suffer from health

problems and work in physically demanding jobs, have extended their careers. Among nondisabled

workers in their early fifties, those with no more than a high school diploma are more than 50 percent


more likely to develop a disability by age 65 than those with a four-year college degree. Workers ages

55 to 65 who did not attend college are nearly twice as likely to hold a physically demanding job as

those who attended college. Because people with health problems often fall through the disability

safety net, early Social Security retirement benefits pull many older people with health problems out of

poverty, especially those with limited education.

Consequently, raising the EEA without making other policy changes to protect people who are

unable to work until they qualify for retirement benefits could create significant economic hardship.

Additional policy reforms could mitigate the financial impact of raising the EEA for some retirees, but it

seems unlikely they could fully protect all vulnerable older adults. More thoroughly evaluating the

health status of older adults with potential disabilities and providing cash benefits in a timely manner to

everyone who cannot work—and only to those who cannot work—is a laudable goal, but it is difficult

and expensive to implement. A more realistic approach is to grant special benefits to certain groups,

such as those in hazardous or arduous occupations. However, these groups would likely include many

people who can work and exclude many who cannot work, so targeting benefits to them would not be

an efficient use of scarce public resources.

Some more modest reforms that could ease the transition to a higher EEA may be warranted. For

example, reducing the SSI eligibility age from 65 to 62 for nondisabled low-income adults with very few

resources would provide a safety net for those who lose access to Social Security retirement benefits at

age 62. Modernizing SSI by instituting a more realistic resource test and improving benefit levels could

provide meaningful protection. Expanding government employment and training services could

improve employment prospects for older adults. Policymakers should also consider reforming DI to

encourage employers to better accommodate workers with disabilities and promote their

rehabilitation. Now may also be a good time to consider providing partial disability benefits to workers

who are not completely disabled.

Policymakers could also reform other aspects of Social Security to make the retirement program

more progressive and offset some of the financial losses that increasing the EEA would impose on low-

income retirees. The recent life expectancy gains that have benefited the overall population have

largely eluded people in the bottom portions of the economic distribution. Consequently, raising the

EEA would make retirements for lower-income people shorter for those who retire over the coming

decades than for those who retired a few decades ago. Changes such as creating a meaningful minimum

benefit or raising the share of lifetime earnings that Social Security benefits replace for lower-income

beneficiaries could maintain the lifetime value of their retirement benefits.


TABLE A.1

Monthly Social Security Benefits as a Percentage of Full Benefits, by Claiming Age and Birth Year

Full Retirement

Age Annual delayed retirement credit

(%)

Monthly Benefit as a Percentage of Full Benefits, by Claiming Age

Birth year Year Month 62 63 64 65 66 67 68 69 70 71 72

1922 65 0 1.0 80.00 86.67 93.33 100.00 101.00 102.00 103.00 104.00 105.00 106.00 107.00 1923–24 65 0 3.0 80.00 86.67 93.33 100.00 103.00 106.00 109.00 112.00 115.00 118.00 121.00 1925–26 65 0 3.5 80.00 86.67 93.33 100.00 103.50 107.00 110.50 114.00 117.50 117.50 117.50 1927–28 65 0 4.0 80.00 86.67 93.33 100.00 104.00 108.00 112.00 116.00 120.00 120.00 120.00 1929–30 65 0 4.5 80.00 86.67 93.33 100.00 104.50 109.00 113.50 118.00 122.50 122.50 122.50 1931–32 65 0 5.0 80.00 86.67 93.33 100.00 105.00 110.00 115.00 120.00 125.00 125.00 125.00 1933–34 65 0 5.5 80.00 86.67 93.33 100.00 105.50 111.00 116.50 122.00 127.50 127.50 127.50 1935–36 65 0 6.0 80.00 86.67 93.33 100.00 106.00 112.00 118.00 124.00 130.00 130.00 130.00 1936 65 0 6.0 80.00 86.67 93.33 100.00 106.00 112.00 118.00 124.00 130.00 130.00 130.00 1937 65 0 6.5 80.00 86.67 93.33 100.00 106.50 113.00 119.50 126.00 132.50 132.50 132.50 1938 65 2 6.5 79.17 85.56 92.22 98.89 105.42 111.92 118.42 124.92 131.42 131.42 131.42 1939 65 4 7.0 78.33 84.44 91.11 97.78 104.67 111.67 118.67 125.67 132.67 132.67 132.67 1940 65 6 7.0 77.50 83.33 90.00 96.67 103.50 110.50 117.50 124.50 131.50 131.50 131.50 1941 65 8 7.5 76.67 82.22 88.89 95.56 102.50 110.00 117.50 125.00 132.50 132.50 132.50 1942 65 10 7.5 75.83 81.11 87.78 94.44 101.25 108.75 116.25 123.75 131.25 131.25 131.25 1943–54 66 0 8.0 75.00 80.00 86.67 93.33 100.00 108.00 116.00 124.00 132.00 132.00 132.00 1955 66 2 8.0 74.17 79.17 85.56 92.22 98.89 106.67 114.67 122.67 130.67 130.67 130.67 1956 66 4 8.0 73.33 78.33 84.44 91.11 97.78 105.33 113.33 121.33 129.33 129.33 129.33 1957 66 6 8.0 72.50 77.50 83.33 90.00 96.67 104.00 112.00 120.00 128.00 128.00 128.00 1958 66 8 8.0 71.67 76.67 82.22 88.89 95.56 102.67 110.67 118.67 126.67 126.67 126.67 1959 66 10 8.0 70.83 75.83 81.11 87.78 94.44 101.33 109.33 117.33 125.33 125.33 125.33 1960 67 0 8.0 70.00 75.00 80.00 86.67 93.33 100.00 108.00 116.00 124.00 124.00 124.00

Source: Author’s calculations from the SSA (2017b).

N O T E S 4 9

Notes 1 “Social Security Contribution and Benefit Bases for 2018-2027 for Current Law and Levels Needed to Achieve

85%, 86%, 87%, and 90% Ratios of Effective Taxable Payroll to Covered Earnings Under the Intermediate

Assumptions of the 2018 Trustees Report,” Unpublished tables. Baltimore, Social Security Administration, June

5, 2018.

2 “After the Normal Retirement Age (NRA) Reaches 67 for Those Age 62 in 2022, Increase Both the NRA and the

Earliest Eligibility Age (EEA) by 36/47 of a Month per Year Until the NRA and EEA Reach 70 and 65

Respectively,” Social Security Administration, 2018.

https://www.ssa.gov/oact/solvency/provisions/charts/chart_run166.html.

3 The American Community Survey is a nationwide household and institutional survey that collects information on

demographic, housing, social, and economic characteristics. Begun in 2005, it interviews about 2 million

households every year. The 1980 Decennial Census collected similar information from a 1-in-20 national

random sample of the population. We use these data to measure trends in educational attainment and accessed

them through IPUMS (Ruggles et al. 2018).

The Annual Social and Economic Supplement of the Current Population Survey is a national household survey

conducted by the Census Bureau that collects demographic, income, and labor force data on about 75,000

respondents every March. We use these data to examine trends in labor force participation rates from 1962 to

2017 and show how they vary by education. We access the data through IPUMS (Flood et al. 2018).

The NHIS collects a wide range of health information on the civilian noninstitutionalized population. Fielded by

the US Census Bureau for the National Center for Health Statistics, it surveys about 87,500 respondents in

35,000 households. We use data from the 1972 to 2017 surveys to measure trends in health status and disability

and show how they vary by age, education, and race and ethnicity. We access the data through IPUMS (Blewett

et al. 2018).

The HRS is a national, longitudinal survey of older Americans. Conducted by the University of Michigan with

primary funding from the National Institute on Aging, it began in 1992 by interviewing about 12,600 adults ages

51 to 61 and their spouses. These respondents have been reinterviewed every other year, and additional cohorts

ages 51 to 56 are added every six years. The most recent available data were collected in 2016. For more

information about the HRS, visit http://hrsonline.isr.umich.edu/. We use the survey to measure the prevalence

of physically demanding jobs and age discrimination, the probability that workers in their early fifties develop

health-related work limitations or become unemployed by age 65, and the likelihood that workers fall into

poverty before and after the EEA.

Our estimates of reemployment probabilities for older laid-off workers are based on data from the 2008 Survey

of Income and Program Participation panel, a longitudinal survey of American households conducted by the

Census Bureau. The Survey of Income and Program Participation interviews households every four months,

collecting information from about 100,000 respondents on employment, earnings, and other topics for the

current month and each of the three previous months. Our data cover August 2008 to April 2012.

4 Social Security also provides benefits to survivors of deceased workers, which may now begin as early as age 60.

However, less than 3 percent of all Social Security benefits awarded to retired workers, their spouses, and their

survivors went to widows or widowers ages 60 or 61 in 2016 (SSA 2017b).

5 In addition, widows and widowers may begin collecting benefits at age 60 based on their deceased spouse’s

earnings.

https://www.ssa.gov/oact/solvency/provisions/charts/chart_run166.html

http://hrsonline.isr.umich.edu/

5 0 N O T E S

6 Raising the EEA would reduce Social Security spending somewhat because some covered workers and

dependents would die before qualifying for benefits under the higher EEA. Additional savings might be

generated if people with shorter life expectancies tend to collect benefits earlier than those with longer life

expectancies. Some high-mortality early beneficiaries would not live long enough to collect enough benefits to

offset the delay in benefit receipt.

7 Nonetheless, average claiming ages increased after the FRA was raised from 65 to 66 (Song and Manchester

2007).

8 Waldron (2007) also found that the lifetime-earnings gap in longevity declined at older ages. Other studies that

document socioeconomics differences in mortality at older ages include Bosworth, Burtless, and Zhang (2016)

and National Academies of Sciences, Engineering, and Medicine (2015).

9 Self-reported health status is necessarily subjective, and health problems that one person might consider serious

may be dismissed by someone else. Nonetheless, these self-reports appear to contain valid health information.

For example, respondents who report poor health exhibit higher mortality rates than those who report better

health (Idler and Benyamini 1997).

10 The National Health Interview Survey asks respondents if they are “limited in the kind or amount of work” they

“can do because of a physical, mental, or emotional problem.” The Health and Retirement Study asks

respondents whether they “have any impairment or health problem that limits the kind or amount of paid work”

they can do.

11 Obesity is based on body mass index, defined as weight in kilograms divided by the square of height in meters.

People with a body mass index of 30 or more are classified as obese.

12 “Labor Force Statistics from the Current Population Survey,” Bureau of Labor Statistics, last updated February 9,

2018.

13 The analysis classified respondents as having been subject to age discrimination if they experienced any of the

following: not getting hired because of age, hearing a negative age-related remark from a colleague or

supervisor, being denied access to training or professional development because of age, being passed up for

promotion because of age, or being laid off or fired because of age.

14 Before 1960, however, only insured adults ages 50 and older could claim disability benefits.

15 However, workers younger than 31—many of whom are too young to have spent 40 quarters in the workforce—

may satisfy the recency-of-work test by earning credits in at least half of the quarters that have elapsed since

age 21, as long as they have earned a total of six credits.

16 The substantial gainful activities amount for individuals who are blind is $1,970.

17 Medicare benefits, then, may not begin until at least 29 months after disability onset.

18 The analysis defined meaningful earnings as $20,000 in 2013 and $11,008 in 1995, the equivalent amount in

wage-indexed dollars.

19 The analysis divided married adults’ household income by the square root of two to adjust for the additional

resources that married people need relative to single people while recognizing the efficiency gains of shared

living arrangements. Income was expressed in 2017 inflation-adjusted dollars.

20 Social Security Retirement Act of 2016, HR 6489 (2016).

https://www.bls.gov/cps/tables.htm#charunem

N O T E S 5 1

21 Social Security reform proposals from the Bipartisan Policy Center (2010) and Diamond and Orszag (2004)

would cut monthly retirement benefits as average life expectancy increased, instead of raising retirement ages.

This approach is similar to raising the FRA while holding the EEA constant, except that changing the benefit

formula could reduce payments to DI beneficiaries, depending on how the reforms were implemented. Raising

the FRA and EEA directly does not affect payments to DI beneficiaries.

22 “After the Normal Retirement Age (NRA) Reaches 67 for Those Age 62 in 2022, Increase Both the NRA and the

Earliest Eligibility Age (EEA) by 36/47 of a Month per Year Until the NRA and EEA Reach 70 and 65

Respectively,” Social Security Administration, 2018.

https://www.ssa.gov/oact/solvency/provisions/charts/chart_run166.html.

23 Average indexed monthly earnings are the monthly average of the top 35 years of indexed earnings received

from jobs covered by Social Security. The index is based on the change in economy-wide average earnings.

Working longer can boost future benefits only if indexed earnings in the additional year of employment exceed

the lowest year of earnings that had previously entered the calculation. Also, most older married and widowed

adults, as well as older divorced adults who had been married for at least 10 years, can receive spouse or

survivor benefits. Spousal benefits equal 50 percent of the retired worker benefit, and survivor benefits equal

100 percent of the retired worker benefit. Additional employment by married adults with spouses with much

higher lifetime earnings or by widowed adults whose spouses had higher lifetime earnings would not raise Social

Security benefits, because their benefits would be based on their (deceased) spouse’s earnings.

24 As of June 2016, 393,000 DI applications filed in 2015, 343,000 applications filed in 2014, and 164,800

applications filed in earlier years were still pending (SSA 2017a).

25 In December 2016, 2.6 million adults ages 60 to 64 received disabled worker benefits from DI (SSA 2017a),

accounting for 13.5 percent of the 19.3 million Americans in that age group (US Census Bureau 2016).

26 These estimates are based on the author’s calculations from the Bureau of Labor Statistics, 2018, “Labor Force

Statistics from the Current Population Survey,” https://data.bls.gov/PDQWeb/ln.

27 In Austria, qualifying jobs must require workers to expend at least 2,000 calories a day for men and 1,400

calories a day for women.

28 Employer compensation would not fall for workers in covered occupations without fringe benefits earning the

minimum wage, however, because their employers would not be able to reduce their wages.

29 The proposal limits the hardship exemption to workers who earned at least $4,800 a year (in 2017 dollars) for at

least 25 years and whose average indexed monthly earnings were less than 250 percent of the aged federal

poverty level.

30 National Skills Coalition, “Interactive Federal Funding Tool,” https://www.nationalskillscoalition.org/federal-

policy/federal-funding-tool.

31 Employment and Training Administration, “Advisory: Training and Employment Guidance Letter No. 17-17,”

https://wdr.doleta.gov/directives/attach/TEGL/TEGL_17-17.pdf.

32 The value of a home, a car, burial funds, and household goods are excluded from these limits.

33 Autor and Duggan (2010) have proposed changes to the US disability system that emphasize rehabilitating

disabled workers and shifting some responsibility to employers.

https://www.ssa.gov/oact/solvency/provisions/charts/chart_run166.html

https://data.bls.gov/PDQWeb/ln

https://www.nationalskillscoalition.org/federal-policy/federal-funding-tool

https://www.nationalskillscoalition.org/federal-policy/federal-funding-tool

https://wdr.doleta.gov/directives/attach/TEGL/TEGL_17-17.pdf

5 2 R E F E R E N C E S

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6 0 A B O U T T H E A U T H O R

About the Author Richard W. Johnson is a senior fellow in the Income and Benefits Policy Center at the

Urban Institute, where he directs the Program on Retirement Policy. His current

research focuses on older Americans’ employment and retirement decisions, long-term

services and supports for older adults with disabilities, and state and local pensions.

Recent studies have examined job loss at older ages, occupational change after age 50,

employment prospects for African Americans and Hispanics age 50 and older, and the

impact of the 2007–09 recession and its aftermath on older workers and future

retirement incomes. He has also written extensively about retirement preparedness,

including the financial and health risks people face as they approach retirement,

economic hardship in the years before Social Security’s early eligibility age, and the

adequacy of the disability safety net. Johnson earned his AB from Princeton University

and his PhD from the University of Pennsylvania, both in economics.

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