Social Security Early Retirement Research Articles

Impact of age differences and race on the social security early retirement decision for married couples

The purpose of this study is to examine the impact of age differences on the social security early and delayed retirement decision for married couples. This article extends the analysis of Docking, Fortin, and Michelson’s 2015 study that assumed the working spouse (male) was older than the non-working spouse (female). In this current study we reverse the spouse and spouse employment role and ages. We now assume a working spouse (female) who is older than her non-working spouse (male). We analyze the nine married couple combinations for the following races: Whites (W), Hispanics (H), and Blacks (B). We develop an Excel model to compute the breakeven internal rate of return (BE IRR) for each of nine race combinations. Three claiming scenarios are considered: receiving benefits early (e.g., at age 62 vs. 66), the maximum realistic delay period (e.g., at age 62 vs. 70), and delaying benefits past full retirement age (e.g., age 66 vs. 70). Within these three claiming scenarios we examine couples by race combination who retire at the same age and at different ages, and with age differences of 0, 4, 7, and 10 years. We compare the results of the two studies. The primary substantive conclusions from this study depends on the age comparisons that are being made. For couples who retire at the same age or at different ages, the greater the age difference the greater the incentive to retire early as the hurdle rate is lower to overcome. This is true irrespective who is older and the breadwinner (earning spouse). Women almost always have higher BE IRRs than men. The implication is that in marriages where the spouse is the breadwinner and the older partner, it is more difficult for the couple to retire early, as compared to marriages where the spouse is the breadwinner and the older partner. Irrespective of who is the breadwinner, Hispanics have higher hurdle rates, whereas Whites have lower hurdle rates. For a given retirement age comparison or age difference the results can be interpreted as follows: the high (low) breakeven group would prefer to retire later (earlier) because the hurdle rate is more difficult (less difficult) to overcome. Thus, Hispanics have a more difficult time retiring early, whereas Whites have a less difficult time retiring early.

SUICIDE AND THE SOCIAL SECURITY EARLY RETIREMENT AGE

Using a regression discontinuity framework, this paper documents a previously unnoticed drop of 7%–8% in the U.S. suicide rate upon reaching age 62 during 1990–2014. This decline is concentrated among men, nearly doubled in size over the most recent decade as the income gap between those just older and younger narrowed, and represents the only trend break among ages 45–79. These findings, along with the observed timing of retirement and benefit claims and research on how income affects suicide, suggest that the likely explanation is Social Security early retirement benefit eligibility rather than retirement per se. (JEL I12, H55)

The Social Security Early Retirement Benefit as Safety Net

In this paper we used the Health and Retirement Study to examine the health and economic status of those who collect Social Security retirement benefits prior to the full retirement age. We used a propensity score reweighting method to estimate the fraction of early retirees who use early retirement benefits as a safety net against deteriorating health and who might be induced to apply for disability benefits (SSDI) or retire without income replacement if the generosity or availability of early retirement benefits were reduced. We find that while the majority of early retirees would likely not qualify for disability benefits, approximately one in five have health characteristics similar to SSDI beneficiaries, and thus might not be able to replace losses in benefit income with labor income.

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

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?

A Comparison of Early Retirement Pensions in the United States and Russia

Early retirement pensions for particular occupations free national policy to establish the social security early retirement age at a later age that is more appropriate for the population as a whole. This paper focuses on early retirement pensions in the United States and the Russian Federation. While comparing early retirement pensions generally, the paper provides a more detailed discussion of the pensions for musicians. While this is an unconventional group to choose for the study of pensions, study of their pensions yields insights into the principles underlying retirement age policy in the two countries.

The Supplemental Security Income Program and Incentives to Take up Social Security Early Retirement: Empirical Evidence from Matched SIPP and Social Security Administrative Files

Features of the Supplemental Security Income (SSI) program and the social security retirement system may interact in a manner that creates incentives for prospective SSI recipients to take social security early retirement (SSER). This paper takes a first close look at this issue. The work disincentives posed by SSI rules and the potential interactions between the SSI and SSER programs are outlined in a basic theoretical framework. The hypotheses that emerge can be tested using public-use microdata linked to Social Security Administration records. We first present evidence supporting the hypothesis that SSI rules induce prospective SSI recipients to substantially reduce work activity (by various measures) prior to age 65. We then present two types of evidence on SSI-SSER interactions. We do not find a simple correspondence between generous SSI benefits and SSER use, which might be an expected indirect SSI-SSER interaction. However, estimates for some specifications for SSER receipt, derived directly from the theoretical interaction between SSER and SSI rules through the household budget constraint, provide evidence of a direct interaction between SSER and SSI, with SSI inducing use of SSER for those individuals for whom the SSI-SSER interaction eliminates the reduction in benefits associated with early receipt of social security benefits.

Retirement and wealth.

Retirement and wealth.

Retirement and Wealth

This paper estimates reduced form retirement and wealth equations, and analyzes the relationship between them. Data are from the first four waves of the longitudinal Health and Retirement Study, individuals born from 1931 to 1941. Single equation retirement models relate the probability of retiring to forward looking measures of changes in the values of social security and pension benefits when retirement is postponed. Such simple models suggest that if the social security early retirement age were to be raised or abolished, more people would retire earlier rather than later. Our work analyzes the reasons for such counter intuitive predictions, and discusses the need to analyze these policies in the context of a structural model of retirement and wealth. To improve retirement analysis, we develop the premium value, a measure of the future value of pensions and social security that better reflects the accrual of benefits under defined contribution plans. We also introduce a new definition of retirement to blend information on objective hours worked with subjective self reports of retirement status. Our findings also explore the effects of social security incentives on partial retirement, and consider the importance of partial retirement in any study relating social security to retirement behavior.

Social Security Benefits and Employer Behavior: Evaluating Social Security Early Retirement Benefits As a Form of Unemployment Insurance

Employers often shed older workers by encouraging them to “take” early retirement. An implicit contract model suggests that this behavior will be influenced by the social security early retirement program. When demand is weak and layoffs are necessary, social security benefits can act like a form of unemployment insurance, effectively subsidizing workforce reductions by lowering the cost to the firm of shedding older workers. Since social security benefits are not subject to experience rating, the result is an inefficiently high level of early retirements. This paper concludes with a discussion of policies for restoring early retirements to efficient levels.

Retirement against the demographic trend: More older people living longer, working less, and saving less

The American population is aging rapidly and individuals are living longer. Yet Americans are saving less and older workers are leaving the labor force at younger and younger ages. The accelerated drop in labor force participation corresponds roughly to the introduction of Social Security and the adaptation of employer-provided pension plans. I have illustrated that Social Security and employer-provided pension plans provide substantial incentive to leave the labor force early. The quantitative effect of this inducement is illustrated by simulating the effects of changes in pension plan and Social Security provisions on the retirement decisions of employees in a large firm, who are covered by a typical defined benefit pension plan. Scheduled Social Security changes would have little effect on the retirement decisions of employees with a typical defined benefit pension plan like the one considered here. But if the pension plan provisions were changed to correspond to the Social Security changes, the effect would be very large. And, although not contemplated by current legislation; it is clear that an increase in the Social Security early retirement age would have a substantial effect on the early retirement rates of the large number of employees not covered by a pension plan.

Factors influencing the choice of social security early retirement benefits

The present research focuses directly on the choice of early retirement Social Security benefits in 1973 for men who responded to the National Retirement History Survey. This focus is more appropriate than examining early retirement more generally when the issue is solvency of the Social Security system and appropriate changes in benefits and eligibility. While this study confirms the important role of private pensions, it tests an important concept of availability of suitable work. This factor, which proved to be a significant predictor of early beneficiary status for both blacks and whites, is critical to assumptions concerning the effect of possible changes in the age of eligibility for Social Security Early Retirement benefits. The data are also used to estimate a dramatic increase in poverty among early benficiaries and their families if these benefits were removed from their current income.