Social Security Reform: Implications of Raising the Retirement Age

Question: How might increases to the Social Security retirement age affect the solvency of the Old-Age Survivors Insurance, Disability Insurance, and Supplemental Security Income programs? Finding: Raising the Social Security early or full eligibility retirement ages could improve the OASDI balance sheet by reducing benefits paid out and increasing payroll taxes collected as well as contribute to economic growth as workers staying in the labor force for longer. However, this could lead to higher unemployment at younger ages and increases in applications for DI and SSI (among those who for health reasons are not able to stay in the labor force longer). Some portions of the population (e.g., less-healthy older workers and those in blue-collar occupations) may encounter difficulties remaining in the labor force. Recommendation: There is a need for greater understanding through further research on how to prevent effects of any changes from falling disproportionately on already-vulnerable populations.