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Adjusting Government Policies for Age Inflation

John B. Shoven

No 14231, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Government policies that are based on age do not adjust to the fact that a given age is associated with a higher remaining life expectancy and lower mortality risk relative to earlier time periods due to improvements in mortality. We examine four possible methods for adjusting the eligibility ages for Social Security, Medicare, and Individual Retirement Accounts to determine what eligibility ages would be today and in 2050 if adjustments for mortality improvement were taken into account. We find that historical adjustment of eligibility ages for age inflation would have increased ages of eligibility by approximately 0.15 years annually. Failure to adjust for mortality improvement implies the percent of the population eligible to receive full Social Security benefits and Medicare will increase substantially relative to the share eligible under a policy of age adjustment.

JEL-codes: H51 H55 J11 J14 (search for similar items in EconPapers)
Date: 2008-08
New Economics Papers: this item is included in nep-age and nep-cba
Note: AG PE
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Published as Adjusting Government Policies for Age Inflation , John B. Shoven, Gopi Shah Goda. in Demography and the Economy , Shoven. 2011

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