The Impact on Inequality of Raising the Social Security Retirement Age

Dean Baker and David Rosnick

CEPR Reports and Issue Briefs from Center for Economic and Policy Research (CEPR)

Abstract: There have been a number of proposals in policy circles that involve raising the Social Security retirement age. This is viewed as both a way to reduce or eliminate the projected shortfall in the program and also a response to projected increases in longevity. This paper examines the impact of an increase in the retirement age on various demographic groups. Treating future Social Security benefits as a form of wealth, it projects the impact of a gradual increase in the normal retirement age from 67 to 70 (2 months a year for 18 years) on each quintile of the wealth distribution using data from the Federal Reserve Board’s 2007 Survey of Consumer Finances. It constructs separate projections for homeowners and non-homeowners, single individuals and couples in the age cohorts 35-44, 45-54, and 55-64. The projections show that Social Security wealth is a far larger share of the wealth of the bottom four quintiles in each of these categories, therefore a reduction in Social Security benefits will have the effect of increasing inequality.

Keywords: social security; retirement; inequality; retirement age (search for similar items in EconPapers)
JEL-codes: D D3 D31 D6 D63 H H5 H55 J J1 J14 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2012-04
New Economics Papers: this item is included in nep-age, nep-dem and nep-pke
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:epo:papers:2012-12

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