Is the Adjustment of Benefits Actuarially Fair?

Published: 2020
Project ID: UM20-06


Adjustments to benefits for individuals who delay claiming are designed to reward work and ensure equitable treatment between those who delay and those who claim early. Over the past 20 years, Social Security claiming ages have increased and become more dispersed. Previous studies show that old-age work, claim ages, and longevity all rise with educational attainment, and increasingly so of late. We hypothesize that (1) the return to delay may be more than actuarially fair in practice, because workers with lower mortality tend to delay claiming, and (2) it may exacerbate inequality, because workers with lower mortality have higher lifetime earnings. We will investigate the extent to which mortality varies with the claim age of retired worker beneficiaries and how that relationship has changed over time. We will consider whether a reduction in the delayed retirement credit may help restore progressivity and funding balance to Social Security.