The Postretirement Well-Being of Workers With Disabilities

Older workers who develop significant limitations in health or functioning face declines in income and consumption and an increased likelihood of poverty in the years prior to retirement. We assess the extent to which those differences persist after reaching retirement age. We use the Health and Retirement Study (HRS) linked to Social Security Administration (SSA) records to compare the postretirement financial well-being of workers who experienced disability onset during their working years with those who did not, based on their claiming behavior for Social Security disability and retirement benefits. We find that even after full retirement age, gaps that emerged prior to retirement persist; those who experienced disability prior to retirement had lower incomes, were more likely to be in poverty, and had significantly lower wealth. Workers with disabilities who claimed Social Security Disability Insurance (DI) fared better than those who were rejected for such benefits, yet both groups were worse off than those who delayed claiming benefits until they were eligible for Social Security Old Age and Survivors Insurance (OASI) benefits. Our findings indicate that any changes to the Social Security benefit structure must be mindful of the short- and longer term implications for already-vulnerable groups of workers.