The Consequences of Current Benefit Adjustments for Early and Delayed Claiming

Title The Consequences of Current Benefit Adjustments for Early and Delayed Claiming
Publication TypeReport
Year of Publication2021
AuthorsBiggs, AG, Chen, A, Munnell, AH
Series TitleCenter for Retirement Research at Boston College Working Papers
Document NumberWP#2021-3
InstitutionCenter for Retirement Research at Boston College
CityBoston, MA
Keywordsinterest rates, Life Expectancy, Social Security claiming
Abstract

Workers have the option of claiming Social Security retirement benefits at any age between 62 and 70, with later claiming resulting in higher monthly benefits. These higher monthly benefits reflect an actuarial adjustment designed to keep lifetime benefits equal, for an individual with average life expectancy, regardless of when benefits are claimed. The actuarial adjustments, however, are decades old. Since then, interest rates have declined; life expectancy has increased; and longevity improvements have been much greater for high earners than low earners. This paper explores how changes in longevity and interest rates have affected the fairness of the actuarial adjustment over time and how the disparity in life expectancy affects the equity across the income distribution. It also looks at the impact of these developments on the costs of the program and the progressivity of benefits.

URLhttps://crr.bc.edu/working-papers/the-consequences-of-current-benefit-adjustments-for-early-and-delayed-claiming/
Citation Key11398