The Impact on Inequality of Raising the Social Security Retirement Age
AbstractThere have been a number of proposals in policy circles that involve raising the Social Security retirement age. This is viewed as both a way to reduce or eliminate the projected shortfall in the program and also a response to projected increases in longevity. This paper examines the impact of an increase in the retirement age on various demographic groups. Treating future Social Security benefits as a form of wealth, it projects the impact of a gradual increase in the normal retirement age from 67 to 70 (2 months a year for 18 years) on each quintile of the wealth distribution using data from the Federal Reserve Board’s 2007 Survey of Consumer Finances. It constructs separate projections for homeowners and non-homeowners, single individuals and couples in the age cohorts 35-44, 45-54, and 55-64. The projections show that Social Security wealth is a far larger share of the wealth of the bottom four quintiles in each of these categories, therefore a reduction in Social Security benefits will have the effect of increasing inequality.
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Bibliographic InfoPaper provided by Center for Economic and Policy Research (CEPR) in its series CEPR Reports and Issue Briefs with number 2012-12.
Length: 16 pages
Date of creation: Apr 2012
Date of revision:
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social security; retirement; inequality; retirement age;
Find related papers by JEL classification:
- H - Public Economics
- H5 - Public Economics - - National Government Expenditures and Related Policies
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J - Labor and Demographic Economics
- J1 - Labor and Demographic Economics - - Demographic Economics
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- D - Microeconomics
- D6 - Microeconomics - - Welfare Economics
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D3 - Microeconomics - - Distribution
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
This paper has been announced in the following NEP Reports:
- NEP-AGE-2012-06-13 (Economics of Ageing)
- NEP-ALL-2012-06-13 (All new papers)
- NEP-DEM-2012-06-13 (Demographic Economics)
- NEP-PKE-2012-06-13 (Post Keynesian Economics)
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