Social Security and Older Workers (CRS Report for Congress)
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| Release Date |
Oct. 16, 2024 |
| Report Number |
R48232 |
| Report Type |
Report |
| Authors |
Zhe Li |
| Source Agency |
Congressional Research Service |
Summary:
Social Security is a social insurance program that provides monthly cash benefits to retired or
disabled workers and their eligible family members and eligible survivors of deceased workers.
This report examines the impact of Social Security retirement and survivor policies on older
workers’ employment and retirement decisions.
Social Security can affect older workers’ employment and retirement decisions in several ways.
From the wealth aspect, Social Security provides resources that make retirement possible. Social
Security benefits are generally available for retired workers and their family members at age 62 and most widow(er)s at age
60. From the benefit accrual aspect, working longer may mean paying more Social Security payroll taxes and having more
earnings included in the benefit calculation. Additionally, delaying Social Security claiming may mean receiving benefits for
a shorter time but with higher monthly benefits. The net effect of disincentives to work (e.g., more payroll taxes and shorter
benefit receipt) and incentives to work (e.g., higher monthly benefits) could be positive or negative.
Social Security policies could explain some historical changes in the employment-population ratio (i.e., the percentage of the
population that is employed) of older workers. For example, the employment-population ratio among individuals ages 60-70
declined from 40.8% in March 1968 to 29.6% in March 1994. Some studies have shown that this decline coincided with the
expansion of Social Security coverage in the 1950s, the introduction of the Social Security early retirement option (in 1956
for women, 1961 for men), and Social Security benefit increases enacted in the late 1960s and early 1970s. After the mid1990s, the declining trend in the employment-population ratio among individuals ages 60-70 reversed and increased to 42.8%
in March 2023. A series of studies found that the policy changes in the Social Security 1983 amendments and later likely
provided incentives to delay Social Security benefit claiming and continue to work at older ages, such as the increase in the
full retirement age (FRA) from 65 to 67, the elimination of the retirement earnings test for those at FRA or older, and the
increase in the delayed retirement credits for those who claim benefits after FRA.
Congress has shown interest in changing Social Security retirement and survivor policies to encourage older individuals to
work longer and postpone claiming Social Security benefits. This can partially improve Social Security’s financial outlook,
because late benefit claimers may contribute more to the Social Security program by working longer and paying more Social
Security payroll taxes. Supporters of those polices contend that the average life expectancy is increasing, health conditions of
older workers are improving, and job characteristics are more suitable for older workers. Opponents often argue that lowwage workers or lower-educated workers may be adversely affected by those policies, such as a further increase in the
retirement age. To address these concerns, policymakers and researchers have suggested some possible approaches that could
accompany those policy changes and might offer certain income protections to vulnerable older adults.
