Will Boomers Delay Social Security?

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A 1983 reform to Social Security is now in full swing for baby boomers: they must wait at least until their 66th birthday to claim their full pension benefits.

But is the gradual increase in the program’s so-called full retirement age – it was 65 for prior generations – having any effect on when boomers retire?

Why people decide to retire when they do is complicated, and economists have tried for years to understand this.  Americans are working slightly longer than they did in the mid-1990s, with the average retirement age rising from 62 to 64 for men and from 60 to 62 for women (though this trend may be stalling). Myriad possible explanations for retiring later include the decline of traditional pensions, greater longevity, healthier older workers, and a more educated labor force.

Another reason could be the 1983 reform delaying the age at which baby boomers in this country are allowed to claim their full Social Security pensions, a reason supported by a new study of similar reforms to Switzerland’s government pensions.

The researchers found that a one-year increase in Switzerland’s full retirement age, or FRA, for women is associated with a half-year delay in when women retire and when they claim their full government pensions.

Both the Swiss and U.S. federal pension reforms have raised their respective FRAs by two years.  Social Security’s FRA is gradually increasing from age 65 to 67 over more than two decades and started with workers born in 1938.  The Swiss reform in 1997 increased the FRA only for women in two quick steps – from 62 to 63 for women born between 1939 and 1941 and from 63 to 64 for those born in 1942 or later.  Switzerland’s more abrupt increase made it easier for researchers to isolate its effect on their retirement behavior.

Studies of U.S. behavior have found a similar response to increases in the Social Security FRA.  To the extent the Swiss findings support this, it means workers have more time to prepare financially for retirement.

The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA or any agency of the federal government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.