An “Elastic” Earliest Eligibility Age for Social Security

Kelly HaverstickMargarita SapozhnikovNatalia A. Zhivan Steven A. Sass

IB#8-2

Introduction

In the early 1980s, Congress responded to the Social Security program’s long-term financing shortfall, in part, by raising the Full Retirement Age (FRA) from 65 to 67.  When fully phased in, for those who turn 62 in 2022, workers will have to wait an additional two years to get the same monthly benefit.  If they do not postpone claiming, the increase in the FRA will cut their benefits by about 13 percent.

Congress did not change the earliest age at which workers can claim.  This Earliest Eligibility Age (EEA) remains 62.  When the increase in the FRA is fully phased in, workers who claim at 62 will get 70 percent, rather than 80 percent, of their FRA benefit.  This has raised concerns that benefits claimed at the EEA will be too low, especially as retirees age and other sources of income decline.  One response would be to raise the EEA from 62 to 64, in line with the two-year rise in the FRA.

There are, however, two important objections to an increase in the EEA.  The primary concern is that it would create hardship for those unable to work or find employment and who lack the resources to support themselves without working until age 64.  A second objection is that raising the EEA is unfair to disadvantaged groups with low life expectancy.  This brief addresses these concerns by considering an “Elastic” EEA, which gives different workers different earliest eligibility ages.