Social Security Retirement Age Research Articles

The Role of Occupations in Differentiating Health Trajectories in Later Life

This study characterizes heterogeneous trajectories of health among older Americans and investigates how employment histories differentiate them. Using the 1998-2010 waves of the Health and Retirement Study, we examine the impact of longest-held occupations on patterns of limitations in activities of daily living. We use latent class growth analysis to identify distinct health trajectory classes and linear growth curve analysis to model the pattern of limitation accumulation for individuals. All analyses are stratified by sex and race, to account for differential labor markets and health experiences of these demographic groups. A limitation of this analysis is its reliance on broad occupational categories rather than specific measures of working conditions. In future work, we plan to incorporate data on specific occupations and merge them with detailed information on occupational characteristics available in the O*NET database (an online repository that has updated the Dictionary of Occupational Titles used in previous research on aging and retirement and occupational epidemiology).The paper found that: White respondents (both male and female) are substantially more likely to be in the healthiest class compared to black respondents. Certain occupations are protective against membership in poor health classes, but the list of protective occupational categories differs substantially by sex and race. The impact of occupations on health trajectories was diminished when we controlled for educational attainment and smoking, suggesting the important role of education in sorting individuals into occupations that differ in physical and cognitive demands that likely influence health. The policy implications of the findings are: Life expectancy alone does not capture all the health information that would be relevant for assessing the capacity of American workers to stay on the job beyond traditional retirement ages. Legislators should consider differences in health and in the trajectories of functional decline across demographic groups defined by sex, race, and occupational exposures when debating further increases in the Social Security retirement age.

Changes in Labor Force Participation of Older Americans and Their Pension Structures: A Policy Perspective

We investigate how the shift in private pension coverage from defined benefit (DB) to defined contribution (DC) retirement plans since the 1980s has contributed to the substantial rise in labor force participation of older Americans. We develop a life cycle model of retirement that captures important aspects of private (DB and DC) and public (Social Security Old-Age) pensions. We demonstrate how this novel framework can assist policy makers and researchers in analyzing the complex interrelations of labor supply decisions, retirement behavior, and wealth accumulation. We begin by illustrating important differences in the incentives for labor supply and retirement behavior provided by DB and DC pensions. We show that the timing of the exit from the labor force is closely tied to wealth accrual in DB plans, while wealth accrual in DC plans does not provide similar incentives for the timing of retirement. We then use the model to conduct a cohort-based simulation analysis of labor force participation for the period 1977 to 2010. The results illustrate the potential significance of the rise in employer-sponsored DC pensions in explaining the increase in labor force participation of older Americans. We estimate that, holding the share of individuals with employer-sponsored pensions constant, the shift from DB to DC pension coverage increased the labor force participation rate of workers age 60 to 64 by 4.9 percentage points (1.7 points for ages 65-69). Finally, we show that DC pension holders are more concentrated at the earliest take-up age for Social Security old-age retirement benefits and are less responsive to changes in Social Security retirement age policy than DB pension holders.

Why We Should Keep the Social Security Retirement Age

In recent years, politicians and analysts from both political parties, pointing to projected increases in life expectancy, have advocated raising social security's normal, or full retirement (FRA), retirement age. The FRA refers to the age of eligibility for full benefits. Under the original Social Security Act, the FRA was set at age 65, “based simply on what seemed appropriate and affordable at the time” (Kingson & Altman, 2011, p. 2). In 1983, in the face of concern about the long-term solvency of the program, Congress and then-President Ronald Reagan amended the act to gradually increase the FRA to 67 for individuals born after 1937. This amendment will be fully implemented in 2022. In December 2010, Alan Simpson and Erskine Bowles, the co-chairs of President Obama's National Commission on Fiscal Responsibility, recommended increasing the FRA to age 68 by around 2050 and 69 by around 2070; the early eligibility age (EEA), which is the earliest age individuals can begin collecting benefits (currently age 62) would be increased to 63 and eventually 64. Under this approach, retirement ages would be indexed to “gains in longevity … as life expectancy grows by one year, individuals will still be able to spend an additional 4 months in retirement, as compared to today” (National Commission on Fiscal Responsibility and Reform, 2010, p. 48). Senators from both parties have also advocated increasing the FRA and EEA (Kingson & Altman, 2011).

Policy options for state pension systems and their impact on plan liabilities

AbstractWe calculate the present value of state pension liabilities under existing policies and separately under policy changes that would affect pension payouts. If promised payments are viewed as default free, then it is appropriate to use discount rates given by the Treasury yield curve. If plans are frozen at June 2009 levels, then the present value of liabilities would be $4.4 trillion. Under the typical actuarial method of recognizing future service and wage increases, this figure rises to $5.2 trillion. Compared to $1.8 trillion in pension fund assets, the baseline level of unfunded liabilities is therefore around $3 trillion. A 1 percentage point reduction in cost-of-living adjustments (COLAs) would lower total liabilities by 9–11%; implementing actuarially fair early retirement would reduce them by 2–5%; and increasing the retirement age by 1 year would reduce them by 2–4%. Dramatic policy changes, such as the elimination of COLAs or the implementation of Social Security retirement age parameters, would leave liabilities around $1.5 trillion more than plan assets. This suggests that taxpayers will bear the lion's share of the costs associated with the legacy liabilities of state DB pension plans.

The Social Security Retirement Age(s) Debate: Perspectives and Consequences

The Social Security Retirement Age(s) Debate: Perspectives and Consequences

Raising the Social Security Retirement Age: Disciplinary Perspectives

Raising the Social Security Retirement Age: Disciplinary Perspectives

Race, Ethnicity, and Social Security Retirement Age in the us

This study uses the AHEAD survey to examine the effects of increasing the Social Security retirement age in the United States by modeling the labor force participation decisions of men and women over the age of 65. Separate probit analyses by gender with interaction terms indicate that race/ethnicity is only marginally important in these decisions after controlling for key factors such as health, physical and mental disabilities, education, and nonlabor income. However, detailed examination reveals highly significant differences by race and ethnicity in all of these critical factors, as well as in the distribution of previous occupations. Although elderly blacks and Hispanics have greater financial need than whites, they have significantly less ability to continue working for pay. Thus, seemingly race- and ethnicity-neutral policies such as increasing the full Social Security retirement age may have disproportionate negative effects on elderly members of minority groups in the US.

Potential Consequences of Raising the Social Security Eligibility Age on Low-Income Older Workers

To examine the potential consequences of raising the Social Security retirement age on future cohorts of low-income elders, this study, based on data from the Health and Retirement Study, 1992–1994, identifies factors that may hinder or facilitate continuous employment among older workers born between 1931 and 1941. Specifically, following the analysis of labor-force participation rates and self-reported reasons for non-work, multivariate logistic regression models tested the relationship between individual strengths and constraints, social-structural opportunities and constraints, and economic need variables and the likelihood of work. The findings show that for both men and women, having disabilities was the most significant predictor of non-work. Racial differences, especially in men's labor-force participation rates, appeared to be due in large part to significant racial differences in disability rates. A higher proportion of blacks and Hispanics than whites also reported that they were unemployed. Based on the findings, raising the Social Security eligibility age is likely to result in increased numbers of Disability Insurance (DI) claimants, and the fiscal impact of such an increase needs to be examined. The need to assist unemployed older persons is also discussed.

Social Security Retirement Age: Alternatives and Cost Comparisons

The burden of financing the Social Security system is expected to increase dramatically in the future as the ratio of covered workers to beneficiaries declines. Recently, the National Committee on Social Security recommended a gradual increase in the retirement age to age 68. An alternative plan to increase the retirement age to age 70 is proposed. Cost savings of both plans are compared. The alternative plan's savings are roughly 40 percent greater than the savings of the NCSS plan. Social and political factors relevant to the passage of any such plan are also discussed. Future financing of the social security program is an oft discussed problem facing this country. Since social security's inception in 1935, the demographics of the American work force have changed dramatically. Originally, in 1935, there were 9.4 people at the working ages (20-64) for every individual age 65 and older. In 1980, this ratio was 5. 1, and in the next 50 years it is estimated to decrease to between 2.0 and 3.1 (p. 61, 5). Using a similar measure, these demographic changes can also be seen. The ratio of covered workers to retired worker beneficiaries was 6.2 in 1980 with expectations of further declines in the decades to come. One forecast projects that in the next 50 years this ratio will decline to between 1.9 and 3.2 depending on the specific assumptions employed (p. 54 and p. 67, 5). This relative decline in social security contributors to social security retired worker beneficiaries is likely to cause an increasing burden on the American workers. This increased burden may even create generational conflicts. Peter Drucker succinctly comments on this possibility in (1): Beyond a certain point, the proportion of retired people becomes so large as to be economically unsupportable, and seriously damages the economy's capacity to produce, to form capital, and to improve productivity. As the proportion of retirees goes up, a conflict arises between the young producer and the older consumers . . . Old people can exploit young producers because they outvote them. People over 55 . . . already hold something like two-fifths of the voting power in every developed country (if only because older people tend to vote more heavily than those under 35). The authors are both Assistant Professors of Business Administration at Emory University. The authors wish to acknowledge the useful comments by two anonymous referees. Also, special thanks must go to Mr. Steve Goss of the Social Security Administration for his help in supplying the cost estimates of the alternatives discussed within this paper. Naturally, all others but the authors are exonerated from remaining errors and omissions.