Increasing the Early Retirement Age Under Social Security: Health, Work, and Financial Resources

Abstract

Policies that would reduce or eliminate Social Security benefits for early retirees could have adverse consequences for older workers in poor health. This Brief documents the health and financial status of people aged 62-64 who receive reduced Social Security benefits as retired workers, spouses, and widowed spouses. Although most of these early retirees do not have a serious health condition, almost half report some type of health problem. About 25 percent are estimated to have health problems that substantially impair their ability to work. When compared to other early retirees, those who have severe health problems have lower lifetime earnings, are more reliant on Social Security benefits, have fewer financial assets, and are less likely to have health insurance. About 12 percent of early retirees are estimated to meet the strict disability criteria for receiving Social Security Disability Insurance (DI) or Supplemental Security Income (SSI). Many of them do not receive DI because they lack sufficient work histories to qualify. Another larger subgroup does not meet the test of low income and limited financial assets for means-tested SSI disability benefits. About as many 62-64 year olds classified as severely disabled receive early retirement benefits as receive disability benefits from DI or SSI. The evidence suggests that Social Security early retirement benefits serve as a substantial, albeit unofficial, disability program for some early retirees.

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