The Social Security Early Retirement Benefit as Safety Net

Published: 2010


In this paper we used the Health and Retirement Study to examine the health and economic status of those who collect Social Security retirement benefits prior to the full retirement age. We used a propensity score reweighting method to estimate the fraction of early retirees who use early retirement benefits as a safety net against deteriorating health and who might be induced to apply for disability benefits (SSDI) or retire without income replacement if the generosity or availability of early retirement benefits were reduced. We find that while the majority of early retirees would likely not qualify for disability benefits, approximately one in five have health characteristics similar to SSDI beneficiaries, and thus might not be able to replace losses in benefit income with labor income.

Key Findings

    • We use Health and Retirement Study data to analyze the health and economic status of those who apply for early retirement benefits and find that 1 in 5 of early retirees match the characteristics of Disability Insurance recipients.
    • The pattern of using early retirement benefits as a response to poor health is most evident for men and unmarried women.  Married women who retire early appear to weigh other factors in that decision.
    • Early Social Security benefits likely provide a safety net for those in poor health, who are either not in poor enough health to be eligible for disability benefits or who, for whatever reason, did not apply for them.
    • If the early retirement age for Social Security were to increase without an alternative safety net in place, it seems likely that this group of early retirees who are least able to work would either attempt to qualify for DI or face substantial income losses.