The Impact of Late-Career Health and Employment Shocks on Social Security and Other Wealth

Abstract

Although health and employment shocks are fairly common at older ages and often derail retirement savings plans, Social Security’s disability insurance, spouse and survivor benefits, and progressive benefit formula may provide important protections.  By contrast, traditional employer-sponsored pension benefits may be especially vulnerable to health and employment shocks immediately before benefit take-up, because pension wealth generally grows rapidly near the end of the career and workers forfeit these increases if they separate early. This study examines the impact of disability onset and job layoffs on Social Security wealth, traditional employer-sponsored pension wealth, and other household wealth for a nationally representative sample of workers age 51 to 55 in 1992…