The Effects of Changing Social Security Administation's Early Entitlement Age and the Normal Retirement Age

The Old-Age and Survivors Insurance (OASI) program is projected to be unable to meet
its obligations by approximately the year 2041. Many proposals that aim to restore
solvency include provisions to accelerate the already legislated increase of the normal
retirement age (NRA) or to increase it beyond the current target of 67 years; some
proposals also suggest raising the early entitlement age (EEA) beyond 62 years.
This document sheds light on the implications of EEA and/or NRA increases on the
solvency of the OASI and DI programs. It does not discuss private accounts. The report
starts with a characterization of workers who claim benefits at age 62 and a discussion of
retirement planning. We then estimate formal models of retirement and DI application
and simulate the financial consequences of EEA and/or NRA increases and other policy
proposals. We conclude with an assessment of likely responses of employers to changes
in Social Security policy.
Most analyses in this report are based on the Health and Retirement Study (HRS), a
survey of individuals in their 50s and 60s with very extensive information about work,
financial resources including Social security and private pensions, and health.