"Introduction, A New Deal for Old Age: Toward a Progressive Retirement"
Introduction, A New Deal for Old Age: Toward a Progressive Retirement (Harvard University Press, 2016).
Yale Law School, Public Law Research Paper No. 570
As America’s haves and have-nots drift further apart, rising inequality has undermined one of the nation’s proudest social achievements: the Social Security retirement system. Unprecedented changes in longevity, marriage, and the workplace have made the experience of old age increasingly unequal. For educated Americans, the traditional retirement age of 65 now represents late middle-age. These lucky ones typically do not face serious impediments to employment or health until their mid-70s or even later. By contrast, many poorly educated earners confront obstacles of early disability, limited job opportunities, and unemployment before they reach age 65.
America’s system for managing retirement is badly out of step with these realities. Enacted in the 1930s, Social Security reflects a time when most workers were men who held steady jobs until retirement at 65 and remained married for life. The program promised a dignified old age for rich and poor alike, but today that egalitarian promise is failing. This introductory chapter to A NEW DEAL FOR OLD AGE outlines a progressive program that would permit all Americans to retire between 62 and 76 – but would offer more generous benefits for early retirement for workers with low wages and physically demanding jobs. The chapter also sketches the case for a more equitable version of the outdated spousal benefit and a new phased-retirement option to permit workers to transition out of the workforce gradually.
Recent reforms to social security in many countries have sought to delay retirement. Given the family context in which retirement decisions are made, social security reforms have potentially important spill-over effects on the participation of spouses. This paper analyses the impact of women's pension incentives on the retirement decision of their husband. The 1993 Age Pension reform in Australia increased the eligibility age for Age Pension benefits for women. This reform caused an increase in participation of men married to women in the affected cohorts. The behavioral responses are due to wealth effects and preferences for shared leisure.
Indian government launched the Rashtriya Swasthya Bima Yojana (RSBY), a national health insurance scheme, in 2008 that provides cashless health services to poor households in India. We evaluate the impact of RSBY on RSBY beneficiary households' (average treatment impact on the treated) utilization of health services, per capita out-of-pocket (OOP) expenditure, and per patient OOP expenditures on major morbidities. To address the issue of non-randomness in enrollment into the scheme, we exploit the longitudinal aspect of a large nationally representative household survey data to implement a difference-in-difference with matching. We find some evidence of positive impact of RSBY on utilization of health services by RSBY beneficiary households in rural India but not in urban India. However, there is no evidence that the RSBY reduced per person OOP expenditure for RSBY households in both rural and urban areas. Conditional on having received medical treatment for major morbidity, we find that RSBY increased probability of hospitalization and being treated by a government doctor in rural areas but no significant impact in urban areas. We also find lower expenditure on medicine for a RSBY cardholder patient in rural areas.
"Are Early Claimers Making a Mistake?"
CRR WP 2016-5
ALICIA H. MUNNELL, Boston College - Center for Retirement Research
GEOFFREY SANZENBACHER, Boston College Economics Department
ANTHONY WEBB, Boston College - Center for Retirement Research
CHRISTOPHER M. GILLIS, Boston College, Center for Retirement Research
Using Health and Retirement Study (HRS) data and Latent Class Analysis for three cohorts (those born in 1931-1936, 1937-1941, and 1942-1947), this paper explores: 1) who claims Social Security benefits at age 62; 2) what percentage of households claiming at 62 are unprepared for retirement; and 3) whether the unprepared early claimers were pushed into claiming through job shocks and/or poor health or simply decided to take benefits early. Looking across three cohorts makes it possible to see whether these patterns have changed as the average claim age has increased and pension coverage has shifted away from defined benefit (DB) plans. That is, have those who have moved out of age-62 claiming been educated, financially prepared households or unprepared households that have recognized the need to delay claiming?
The paper found that:
- Consistent with previous research, the HRS shows a decline in those claiming at 62.
- Age-62 claimers are less well off than “postponers” in some ways and better off in others.
- Latent class analysis shows that this mixed picture reflects the average of: 1) those with little education and poor job prospects (disadvantaged); and 2) those with at least some college and sufficient resources to claim early (advantaged).
- The percentage of the age-62 claimers in each of these groups has remained virtually constant over the three cohorts.
- Comparing the calculated household replacement rates with target rates from previous research shows that, overall, roughly 65 percent of households claiming at 62 are not prepared; the rate for the disadvantaged group is twice the rate of the advantaged group.
- The percentage unprepared at 62 has increased over time, reflecting an overall trend toward less preparedness.
- A simple probit regression suggests that health and employment shocks and the absence of a DB pension are related to the lack of preparedness for both the disadvantaged and advantaged.
The policy implications of the findings are:
- Given the increasing trend in unpreparedness, further cuts to Social Security benefits would exacerbate this problem.
- Workers claiming at 62 with DB plans were especially likely to be prepared; these plans are not coming back, so the challenge is whether the 401(k) system can be enhanced.