Equity Implications of the Rising Full Retirement Age and Social Security Communications: An Analysis of Past and Future Disparities in the Economic Security of Retirees

Published: 2023
Project ID: UM23-15


The Social Security Amendments of 1983 raised the Full Retirement Age (FRA), the age at which claimants receive an unreduced monthly benefit, from 65 to 67. However, this change was set to be gradually implemented, with the first increase from 65 to 66 phased-in between 2001 and 2009, and the second increase to 67 just underway, having started last year. Workers with higher FRAs who claim early face a lower monthly benefit than earlier cohorts. Affected workers, on average, did delay claiming during the first increase in the FRA. Yet this delay in claiming was driven by households least likely to be dependent on Social Security income (Behaghel and Blau 2012). Given that Social Security benefits have an equalizing effect on the wealth distribution (Sabelhaus and Volz 2020), the rising FRA represents a reduction in retirement wealth borne by the population most reliant on those benefits. This reduction can increase inequality in economic security, especially racial/ethnic wealth inequality given existing substantial disparities in other forms of retirement wealth saving (Rosenthal 2021). To what extent will the rising FRA exacerbate these disparities, and do workers know enough to prepare for this benefit reduction? This study proposes to use the Health and Retirement Study to estimate the impact of the prior FRA increase on retirees’ wealth decumulation decisions and economic security in retirement. It will then project forward the impact of the ongoing rise in the FRA on current claimants’ future economic security and the resulting effects on racial/ethnic disparities, and the role SSA communications play in mitigating these disparities.