Academic journal article Social Security Bulletin

Employment at Older Ages and Social Security Benefit Claiming

Academic journal article Social Security Bulletin

Employment at Older Ages and Social Security Benefit Claiming

Article excerpt

A retired worker's Social Security benefit depends in part on the age at which he or she claims benefits. Working longer and claiming benefits later increase the monthly benefit. Information about trends in employment at older ages and the age at which individuals claim Social Security benefits can help policymakers assess the effectiveness of current policies in influencing the timing of retirement and benefit claims. Both the labor force participation rate among older Americans and the age at which they claim Social Security retirement benefits have risen in recent years. For example, from 2000 through 2015, the labor force participation rate among individuals aged 65-69 rose from 30 percent to 37 percent for men and from 19 percent to 28 percent for women. Since 2000, the proportion of fully insured men and women who claim retirement benefits at the earliest eligibility age of 62 has declined substantially.

Introduction: The Aging U.S. Population

In 2016, the oldest members of the "baby boom" generation--the 75 million living Americans who were born in the period 1946-1964 -- are 70 years old, and the youngest baby boomers reach age 52. Over the next 20 years, the proportion of Americans who are aged 65 or older will increase substantially. Growth in the number of older Americans will result in higher expenditures for Social Security, Medicare, and Medicaid, and will affect the amounts and sources of income for tens of millions of individuals and families.

The Census Bureau projects that the U.S. population will grow from 321 million in 2015 to 370 million in 2035, an increase of 15.3 percent. Most of the increase will occur among people aged 65 or older, whose numbers will grow from 48 million in 2015 to 79 million in 2035 -- an increase of 31 million, or 64.6 percent. Over that period, the number of people aged 64 or younger is projected to grow from 274 million to 291 million, an increase of only 17 million, or 6.2 percent. As a result, the proportion of the population that is aged 65 or older is projected to rise from 15.0 percent in 2015 to 21.4 percent in 2035 (Census Bureau 2014).

The growth in the proportion of the population that is aged 65 or older over the next 20 years will reflect recent demographic trends, especially the rise and subsequent fall in birth rates in the second half of the 20th century. Changes in birth rates and death rates typically occur over long periods, and they can take decades to affect the age profile of a nation's population. By contrast, trends in retirement age--and in the age at which individuals claim Social Security benefits--can change substantially in a short time. Choices about retirement and Social Security benefit claiming can affect individuals' retirement income many years into the future. By delaying retirement, for example, workers can continue to accumulate savings instead of beginning to draw those savings down to pay their living expenses. Additionally, workers who delay claiming their Social Security benefits until after the earliest age of eligibility receive larger monthly benefits for life.

This article presents data on trends in the labor force participation rate (LFPR) of older Americans, in the age at which people claim Social Security retired-worker benefits, and in the proportion of men and women aged 62 or older who receive disabled-worker or retired-worker benefits. The data are summarized in six charts. The first chart shows LFPRs based on data collected in the Current Population Survey (CPS), a monthly survey of households conducted by the Census Bureau. The CPS collects data on employment, unemployment, persons not in the labor force, hours of work, and earnings, along with other demographic and labor force characteristics (Census Bureau, n.d.). It is the primary source of data for estimates of the national unemployment rate published monthly by the Bureau of Labor Statistics (BLS). The remaining five charts illustrate trends in Social Security benefit claiming behavior and in beneficiaries as a percentage of the insured population. …

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