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The Characteristics of Social Security Beneficiaries Who Claim Benefits at the Early Entitlement Age

Few workers wait until the age of eligibility for full Social Security benefits; in fact, more workers take their benefits at the earliest age possible—62—than at any other age, even though doing so results in permanently reduced benefits. Raising the early eligibility age (EEA) has been proposed as a way to improve benefit adequacy as life expectancy and the years spent in retirement increase. A key question is who would be adversely affected by an increase.

This PPI Research Paper by Xiaoyan Li, Michael Hurd, and David S. Loughran of the RAND Corporation analyzes the characteristics of workers who take early Social Security retirement benefits. The authors compare workers and their spouses who claim benefits at the EEA to those who claim benefits later, basing their analyses on eight waves of the biennial Health and Retirement Study (1992-2006).

The tabulations suggest that, overall, beneficiaries who claim benefits at age 62 are less educated, less healthy, less likely to work in management and professional occupations and more likely to work in physically demanding jobs, and have lower labor market earnings than do individuals who postpone benefit receipt. About 19 percent of these “Takers” report having a work-limiting health condition when they first become eligible to receive Social Security retirement benefits. Among Takers who report having a work-limiting health condition, 19 percent have no private pension wealth at age 62 and 53 percent have very low pension wealth.

Although it is difficult to predict precisely how workers would respond to an increase in eligibility age, the researchers think it is safe to assume that the implicit reduction in wealth such a policy change would effect could constitute a significant burden on the sizable minority of workers who reach their early 60s in relatively poor health and with little private wealth. (59 pages)