Social Security Claiming Age and the Poverty Trajectories of Older Americans

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Gary V. Engelhardt, Syracuse University and Anil Kumar, Federal Reserve Bank of Dallas

This paper estimates the impact of the early entitlement age on later-life elderly poverty by tracing the poverty status of different birth cohorts of men who had access to different potential claiming ages. Specifically, the focus is on the Social Security Amendments of 1961, which introduced age 62 as the early entitlement age (EEA) for retired-worker benefits for men. Men born in 1896 and earlier moved through their early 60s prior to the 1961 Amendments. They could first claim benefits at age 65, the full benefits age. Men born in 1897 and later were affected by the law change. Those born in 1897 and 1898 could claim as early as age 64 and 63, respectively; those born in 1899 and later could claim as early as age 62. With early claiming, age-65 benefits were actuarially reduced by 5/9ths of a percent for each month of payable benefits before attainment of age 65. For a man claiming at age 62, this represented a 20 percent reduction in benefits, compared to claiming at age 65. Since most women married to men from these cohorts claimed spousal benefits equal to one-half of their husband’s benefits (rather than on their own earnings histories), early claiming could have generated a significant reduction in elderly family retirement income and increased the incidence of poverty in old age.