Who Retires Early?

Abstract

The possibility of increasing the age at which Social Security benefits are first paid merits renewed scrutiny for at least three reasons:

• a decrease in overall benefits would imply that those claiming reduced benefits before the ‘full benefits age’ may accept benefits that seem adequate when claimed but are insufficient when income earnings ends and savings are depleted;

• life expectancy has increased; and

• an enlarged labor force would increase potential national income and ameliorate projected future deficit.

This paper examines differences in personal circumstances between those who retire and those who remain at work for pay at various ages. The findings, based on the Health and Retirement Survey, are that there are differences between these two groups, but they are rather small. Some who claim retirement benefits before the full benefits age would face serious hardship if those benefits were no longer available, however. For that reason, if the age of initial eligibility is increased, consideration should be given to measures targeted on this group. The paper then goes on to consider back-up protections that might be provided to those who now claim early retirement benefits should the age of initial eligibility be increased.