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A new approach to raising Social Security’s earliest eligibility age

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Author Info

  • Kelly Haverstick
  • Margarita Sapozhnikov
  • Robert K. Triest
  • Natalia Zhivan

Abstract

While Social Security’s Normal Retirement Age (NRA) is increasing to 67, the Earliest Eligibility Age (EEA) remains at 62. Similar plans to increase the EEA raise concerns that they would create excessive hardship on workers who are worn-out or in bad health. One simple rule to increase the EEA is to tie an increase to the number of quarters of covered earnings. Such a provision would allow those with long work lives—presumably the less educated and lower paid—to quit earlier. We provide evidence that this simple rule would not satisfy the goal of preventing undue hardship on certain workers. Therefore, this paper considers an alternative policy that ties an increase in the EEA to individuals’ Average Indexed Monthly Earnings (AIME). We show that allowing workers with low AIME to continue to be eligible to receive benefits at age 62 has promise as a policy to protect workers who have low earnings and are in poor health from hardship associated with an increase in the EEA.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Boston in its series Public Policy Discussion Paper with number 08-4.

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Date of creation: 2008
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Handle: RePEc:fip:fedbpp:08-4

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Keywords: Social security ; Retirement income;

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References

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  1. Alicia H. Munnell & Steven Sass & Mauricio Soto & Natalia Zhivan, 2006. "Has the Displacement of Older Workers Increased?," Working Papers, Center for Retirement Research at Boston College wp2006-17, Center for Retirement Research, revised Sep 2006.
  2. repec:crr:issbrf:ib2007-7-3 is not listed on IDEAS
  3. Alan L. Gustman & Thomas L. Steinmeier, 2002. "The Social Security Early Entitlement Age in a Structural Model of Retirement and Wealth," NBER Working Papers 9183, National Bureau of Economic Research, Inc.
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Cited by:
  1. Natalia Zhivan & Steven A. Sass & Margarita Sapozhnikov & Kelly Haverstick, 2008. "An "Elastic" Earliest Eligibility Age for Social Security," Issues in Brief ib2008-8-2, Center for Retirement Research, revised Feb 2008.
  2. David C. Stapleton, 2009. "Employment Support for the Transition to Retirement: Can a New Program Help Older Workers Continue to Work and Protect Those Who Cannot?," Mathematica Policy Research Reports 6248, Mathematica Policy Research.

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