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The Impact of Income Distribution on the Length of Retirement

Author

Listed:
  • Dean Baker
  • David Rosnick

Abstract

Social Security has made it possible for the vast majority of workers to enjoy a period of retirement in at least modest comfort without relying on their children for support. The average length of retirement has increased consistently since the program was started in 1937. However, the increase in the normal retirement age from 65 to 67 that is being phased in over the years 2003 to 2022 largely offsets the increase in life expectancy. As a result, workers who work long enough to collect their full benefits will see little gain in the expected length of their retirement over this period. These gains have gone overwhelmingly to workers in the top half of the income distribution. Consequently, the increase in retirement age will offset the gains in retirement lengths for the bottom half — even if there is no further inequality in improvements in life expectancy. If such inequality in improvements persist, then the bottom half of workers born in 1973 will have retirements no longer than those born in 1937.

Suggested Citation

  • Dean Baker & David Rosnick, 2010. "The Impact of Income Distribution on the Length of Retirement," CEPR Reports and Issue Briefs 2010-25, Center for Economic and Policy Research (CEPR).
    • Handle: RePEc:epo:papers:2010-25
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    File URL: http://www.cepr.net/documents/publications/ss-2010-10.pdf
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Extending the retirement age: is it unfair?
      by Nicholas Gruen in Club Troppo on 2010-11-14 07:14:07

    Citations

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    Cited by:

    1. Roel Beetsma & Alex Cukierman & Massimo Giuliodori, 2016. "Political Economy of Redistribution in the United States in the Aftermath of World War II--Evidence and Theory," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 1-40, November.

    More about this item

    Keywords

    social security; retirement; retirement age; life expectancy;
    All these keywords.

    JEL classification:

    • H - Public Economics
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • 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
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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