Social Security Benefits
Impact of the Social Security Retirement Earnings Test on 62-64-Year-Olds
Research Report
Caroline Ratcliffe, The Urban Institute
Jillian Berk, The Urban Institute
Kevin Perese, The Urban Institute
Eric Toder, The Urban Institute
December 2003
Learn More
- Report Home
- Full Report (PDF)
- In Brief (PDF)
- In Brief (HTML)
The Retirement Earnings Test (RET) reduces the Social Security benefits of beneficiaries who have labor earnings above a threshold amount ($11,520 in 2003). Many workers do not realize that they will recover these benefits after they retire, in the form of higher benefit payments. In this AARP Public Policy Institute Issue Paper, Caroline Ratcliffe, Jillian Berk, Kevin Perese, and Eric Toder of the Urban Institute explore how elimination of the RET would affect the total income of persons aged 62-64, based on their decisions on number of hours to work and when to start claiming Social Security benefits. Their findings are based on simulations using data from the Health and Retirement Study.
The authors found that doing away with the RET would raise current total income for most workers aged 62-64, but much of the income gain would occur among the new beneficiaries with higher income, since lower-income workers would be more likely to be receiving Social Security benefits already. It was also noted that future poverty levels might rise, because receiving Social Security before the normal retirement age leads to a permanent reduction in Social Security benefits. (50 pages)
Pub ID: 2003-15