Research & Analysis by Hilary Waldron
Working and Claiming Behavior at Social Security's Early Eligibility Age Among Men by Lifetime Earnings Decile
Using a merged internal research file of administrative data from the Social Security Administration, the author examines men's working and retired-worker benefit claiming behavior at and around Social Security's early eligibility age of 62, and disaggregates the results by lifetime earnings decile. She also examines how mortality risk varies among men exhibiting different working and claiming behaviors, before and after controlling for the lifetime earnings decile to which they belong. This paper follows up ORES Working Paper No. 114, which details the study methodology and presents summary findings on men's and women's working and claiming behavior. Both papers find substantial heterogeneity in working and claiming behavior at age 62; in this paper, while differences in men's working and claiming behavior were sometimes observed between lifetime earnings deciles, that heterogeneity in behavior was also observed within each lifetime earnings decile.
For this working paper, the author uses a merged internal research file of administrative data from the Social Security Administration to examine working and retired-worker benefit claiming behavior at and around Social Security's early eligibility age of 62, by sex. The author defines various combinations of working and benefit-claiming behavior at or near age 62, for which she presents statistics indicating trends in behavior patterns for men and women born in the years from 1937 through 1944. This paper is an introductory companion to the forthcoming ORES Working Paper No. 115, which focuses on men's working and claiming behavior and disaggregates the results by lifetime earnings decile.
A Multidisciplinary Review of Research on the Distributional Effects of Raising Social Security's Early Entitlement Age
When estimating potential adversity caused by an increase in the early entitlement age (EEA), findings from both the EEA literature and the broader public health literature do not suggest that the Social Security–covered worker population can be easily separated into two groups—an unaffected or low-risk group and an easily identifiable vulnerable or high-risk group. This evidence appears largely supportive of the conclusions reached by the retired-worker benefit's original designers and may suggest implementation difficulties for proposals that seek to raise the EEA, while protecting groups deemed by the proposers to be adversely affected by that increase. Because the risks insured against by the retired-worker benefit are not limited to an easily identifiable segment of the population, the universality of Old-Age Insurance under current law may better match the underlying exposure to risk in the insured population than a targeted or needs-based alternative.
We find that three factors—(1) population growth, (2) the growth in the proportion of women insured for disability, and (3) the movement of the large baby boom generation into disability-prone ages—explain 90 percent of the growth in new disabled-worker entitlements over the 36-year subperiod (1972–2008). The remaining 10 percent is the part attributable to the disability “incidence rate.” Looking at the two subperiods (1972–1990 and 1990–2008), unadjusted measures appear to show faster growth in the incidence rate in the later period than in the earlier one. This apparent speedup disappears once we account for the changing demographic structure of the insured population. Although the adjusted growth in the incidence rate accounts for 17 percent of the growth in disability entitlements in the earlier subperiod, it accounts for only 6 percent of the growth in the more recent half. Demographic factors explain the remaining 94 percent of growth over the 1990–2008 period.
Mortality Differentials by Lifetime Earnings Decile: Implications for Evaluations of Proposed Social Security Law Changes
Under current law, the link between earnings and benefit levels and the equal application of age-of-entitlement rules, regardless of earnings levels, means that a worker is never penalized for additional work or thrift. This article finds that the Social Security–insured population does not fall neatly into a low-earnings poor health group and a remaining good health group. Attempts to target a subset of badly disadvantaged workers by altering the benefit rules that apply equally to everyone could both miss the intended target and introduce work disincentives into a program currently designed to reward work.
The Sensitivity of Proposed Social Security Benefit Formula Changes to Lifetime Earnings Definitions
Several Social Security proposals have included benefit formula changes that apply to earners above a specified percentage of the combined male and female (unisex) lifetime earnings distribution. This study finds that if Social Security's median unisex average indexed monthly earnings (AIME) amount is used to define an earnings threshold below which benefits will be held unreduced, the percentage of fully insured men subject to benefit reductions (70 percent) will exceed the unisex estimate of the population subject to benefit reductions (50 percent) by 20 percentage points. If policymakers wish to adjust future benefits and focus benefit reductions on middle or high primary or full-time wage earners in a household, the male, rather than unisex, AIME would come closer to achieving such a goal.
Trends in Mortality Differentials and Life Expectancy for Male Social Security-Covered Workers, by Socioeconomic Status
This article presents an analysis of trends in mortality differentials and life expectancy by socioeconomic status for male Social Security-covered workers aged 60 or older. Mortality differentials, cohort life expectancies, and period life expectancies by average relative earnings are estimated. Period life expectancy estimates for the United States are also compared with those of other Organisation for Economic Co-operation and Development (OECD) countries.
Trends in Mortality Differentials and Life Expectancy for Male Social Security–Covered Workers, by Average Relative Earnings
This study presents an analysis of trends in mortality differentials and life expectancy by average relative earnings for male Social Security–covered workers aged 60 or older. Mortality differentials, cohort life expectancies, and period life expectancies by average relative earnings are estimated. Period life expectancy estimates for the United States are also compared with those of other Organisation for Economic Co-operation and Development (OECD) countries. In general, for birth cohorts spanning the years 1912–1941 (or deaths spanning the years 1972–2001 at ages 60–89), the top half of the average relative earnings distribution has experienced faster mortality improvement than has the bottom half. The sample is expected to be selectively healthier than the general population because of a requirement that men included in the sample have some positive earnings from ages 45 through 55. This requirement is expected to exclude some of the most at-risk members of the U.S. population because of the strong correlation between labor force participation and health.
The Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds reports on the current and projected future financial status of the trust funds annually. The Trustees project trust fund finances 75 years into the future. Mortality is one key demographic assumption that feeds into these long-range projections. This article reviews a range of predictions about long-term mortality improvement and assesses where the Trustees' 75-year mortality projection falls within this range. In general, the predictions of future mortality declines in the 2004 Social Security Trustees Report tend to be in the mainstream of professional actuarial and international official government opinion and to be lower than the majority of the small group of demographers who produce comparable estimates.
Conventional wisdom holds that the majority of early retirees are in good health and that only a minority are in poor health. This wisdom is based on examinations of levels of health among the early retiree population. In contrast, this paper looks at both the health and mortality risk of early retirees relative to the health and mortality risk of age 65 retirees. This paper finds substantial heterogeneity among early retirees in health and mortality risk related to the age at which they are entitled to Social Security benefits. Early retirees consist of a group in extremely poor health, a group with health equal to age 65 retirees, and a group with health in between. The majority of early retirees are in poorer health and have higher mortality risk than age 65 retirees, and only a minority have health and mortality risk as good as that of age 65 retirees.
Results of a 2001 Gallup poll indicate that the majority of users of the Social Security Administration's (SSA's) research, statistical, and policy products are satisfied with them and with the agency's performance in identifying and working on new and emerging areas of research and policy. Satisfaction varies with professional interests, length of time working with Social Security and Supplemental Security Income issues, work affiliation, and frequency of use of SSA's products.
In the 2001 report of the President's Commission to Strengthen Social Security, the commission states that blacks "on average have both lower incomes and shorter life expectancies than other Americans." This paper examines the extent to which the shorter life expectancies of blacks are explained by differences between their average socioeconomic status and that of other Americans.
Estimates in this paper for men aged 25 to 64 show that about half of the difference in risk of death between blacks and all other races was explained by education level—the measure of socioeconomic status employed. At ages 65 to 90, black men were not found to have a significantly higher risk of death than men of all other races.
In a 2001 working paper, Links Between Early Retirement and Mortality (ORES Working Paper No. 93), the author used cross-sectional Current Population Survey (CPS) matched to longitudinal Social Security administration data and found that men who retire early die sooner than men who retire at age 65 or older. Estimates of relative mortality risk control for current age, year of birth, education, marital status in 1973, and race, and the sample is restricted to men who have lived to at least age 65.
This paper uses the 1982 New Beneficiary Survey and a 1 percent extract of the Social Security Administration's year 2000 Master Beneficiary Records to test whether the mortality differentials reported in the author's earlier work can be replicated in other independent data sets.
In this paper, the author uses the 1973 cross-sectional Current Population Survey (CPS) matched to longitudinal Social Security administrative data (through 1998) to examine the relationship between retirement age and mortality for men who have lived to at least age 65 by 1997 or earlier. Logistic regression results indicate that controlling for current age, year of birth, education, marital status in 1973, and race, men who retire early die sooner than men who retire at age 65 or older. A positive correlation between age of retirement and life expectancy may suggest that retirement age is correlated with health in the 1973 CPS; however, the 1973 CPS data do not provide the ability to test that hypothesis directly.