Work at Older Ages: Is Raising the Early Retirement Age an Option for Social Security Reform?

Abstract

This report examines how changes in worker capabilities and job requirements over the past few decades affect the ability of older workers to work past the Social Security Early Retirement Age of 62. This issue arises because a possible reform of Social Security could raise the early retirement age. This change might be made in conjunction with raising the Normal Retirement Age in order to offset the reduction in annual benefits that workers would receive when retiring at the Early Retirement Age. Fairness is one aspect of the issue of raising Social Security's Early Retirement Age. Would such a change be fair to demographic groups with relatively short life expectancy, to people with physically demanding jobs, or to people at older ages unable to work or to find work? The issue of fairness can be addressed in terms of cross-sectional equity or intergenerational equity. Because workers worked to older ages early in the history of Social Security, the past becomes a natural comparison. This paper focuses on intergenerational equity, comparing different demographic groups over time. The intergenerational question has two parts. First, have older workers' capabilities changed over the past few decades in ways that would affect continued employment? Second, have job requirements changed in ways that would affect continued employment for older workers?