Retirement Responses to early Social Security Benefit Reductions

Respondents who retire early are similar initially, in terms of their health, education, and wealth, to those who subsequently elect the normal retirement path. Both groups are healthier and better educated than those who take disability retirement. Analysis of the life-cycle budget constraint shows that cutting early Social Security benefits would have an uneven effect on beneficiaries. Respondents who are black, have lower levels of education, and are in poor health would suffer relatively large losses. This study finds that a cut in early Social Security benefits would result in more workers delaying benefit acceptance as opposed to taking disability benefits.