Do Men Who Work Longer Live Longer? Evidence from the Netherlands

Laura D. Quinby and Gal Wettstein

Issues in Brief from Center for Retirement Research

Abstract: The 2021 Trustees Report projects that the Social Security Old-Age and Survivors Insurance (OASI) program faces a long-term financing shortfall and that the trust fund will deplete its reserves in little more than a decade, after which payroll tax revenues will cover only about three-quarters of scheduled benefits. Yet, news coverage of the Trustees Report often emphasizes the trust fund depletion date and de-emphasizes the importance of the ongoing tax revenues. This emphasis could lead the public to believe that all future benefits are insecure, as many surveys find. The question is, how do workers respond to their misperceptions? On the one hand, they might claim their benefits earlier than originally planned in the belief that future reforms will spare individuals already on the rolls from benefit reductions – even though, if they claim at age 62 today, their monthly benefit will be reduced by 30 percent for claiming early, and their lifetime benefits will likely be lower as well. On the other hand, workers might insure against future reductions in Social Security benefits by saving more on their own, thereby enhancing their retirement prospects. To answer the question, this brief reports on a recent study that used an online experiment to gauge how different headlines about Social Security’s finances affected planned claiming age, benefit expectations, and savings intentions. The discussion proceeds as follows. The first section provides background on Social Security’s actuarial projections and how they are communicated to the public, while the second section explains the experiment. The third section presents results showing that headlines about the trust fund lead to a shift in intended claiming ages and expected benefit levels, but not future savings goals. The final section concludes that media coverage makes many workers fear an unrealistically severe cut to their future Social Security benefits, and this fear could lead people to claim early, locking in lower monthly benefits without increased saving to make up the gap.

Pages: 9 pages
Date: 2021-10
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