MRRC Newsletter
Page 5

    • Fewer workers would elect ER
    • More workers would be likely to elect DR and NR, but of those choosing these alternatives, more than twice as many workers would choose NR as DR.
  • Overall, given a rather large hypothetical benefit reduction, the magnitude of the anticipated change in retirement pathways is quite small.
    • If ER benefits were to be cut entirely, the same pattern is observed. As in the benefit reduction experiment, workers would be three times more likely to opt for NR as DR.
    • Under these hypothetical scenarios, workers likely to move to DR instead of NR are more likely to be in poor health, reflecting the fact that they are more likely to be medically eligible for DR benefits.
    • Workers with employer health and disability insurance are less likely to opt for DR. However, workers with retiree health coverage and pensions are more likely to move to DR.


   Our policy experiment indicates that early Social Security benefit cuts would have relatively small effects on the likelihood of early retirement. If early retirement benefits were to be eliminated, more than twice as many workers in this sample would be likely to work to normal retirement age as opposed to filing for disability retirement. Thus, we conclude from these findings that Social Security early retirement benefit cuts would induce more workers to delay benefit acceptance rather than opt for disability retirement.

Olivia S. Mitchell is the Executive Director of the Pension Research Council, at the Wharton School of the University of Pennsylvania, Philadelphia, PA 19104 ( John W.R. Phillips is an Economist at the Social Security Administration’s Division of Policy Evaluation in Washington, DC ( Fine research assistance was provided by David McCarthy and Dan Silverman, and very helpful computational assistance by Mike Nolte. Useful comments were provided by Courtney Coile, John Gruber, Howard Iams, and Kalman Rupp. This research was conducted with support from the Michigan Retirement Research Center (MRRC) at the University of Michigan, the Population Aging Research Center at the University of Pennsylvania (Mitchell and Phillips), and the Pension Research Council at the Wharton School (Mitchell); and part of the NBER programs on Aging and Labor Economics. Support for the MRRC comes from the Social Security Administration (SSA)
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