Resetting Social Security

S. Jay Olshansky, Dana P. Homme d'or & John W. Rowe

Abstrait: Social Security retirement bene½ts were ½rst introduced in 1935 as a ½nancial safety net for a
large and rapidly growing older American population. The program was intended to be economically self-
sustaining, but population aging and rising life expectancies threaten the program’s solvency. Le 1983
Social Security Amendments mandated that the full retirement age increase to 67 by the year 2027. Dans
this essay, we present evidence demonstrating that the rate of improvement in life extension at older ages
accelerated after 1983. Si le 1935 ratio of working years to retired years is maintained, early and full
retirement ages of 66.5 et 69.4, respectivement, were justi½ed in 2009. Additional delays in the age of eligi-
bility beyond those currently in ef fect would place signi½cant ½nancial burdens on individuals with lower
life ex pectancies, the poor and near-poor, and the very old, and–absent additional reform–would exac-
erbate existing unequal access to entitlements within the system.

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In the future when there are a great many persons over
65, most of the able-bodied individuals will and should
continue working to age 70 ou 75 if their services seem
needed.

–Robert J. Myers, Chief Actuary (1947–1970) and Deputy
Commissioner (1981–1982) of the Social Security Admin-
istration (ssa) and leader of the National Commission on
Social Security Reform (1982–1983)1

Has the time arrived to reset the age of eligibility
for Social Security retirement bene½ts? When Pres –
ident Roosevelt signed the Social Security Act (ssa)
dans 1935 in the wake of the Great Depression, unem-
ployment was 34 pour cent, savings accounts were dec –
imated, and almost 50 percent of the older popula-
tion was dependent on family and friends for ½nan-
cial support. There was reason to believe large seg-
ments of the population–particularly the elderly–
were facing destitution.2

To address this concern, the Committee on Eco-
nomic Security was established by executive order
dans 1934. What we know today as Social Security began
simply as a federally administered social insurance
retirement program for older people, nominally ½ –
nanced through payroll taxes and paid for by work-

S. JAY OLSHANSKY is Professor
of Epidemiology at the School of
Public Health, Division of Epide –
miology and Biostatistics at the
Uni versity of Illinois at Chicago.
DANA P. GOLDMAN is Professor
of Public Pol icy, Pharmacy, et
Economics at the University of
Southern California.
JOHN W. ROWE, un membre du
Académie américaine depuis 2005, est
Professor at the Columbia Universi-
ty Mailman School of Public Health
and Chair of the MacArthur Foun-
dation Research Network on an
Aging So ciety.

(*See endnotes for complete contributor
biographies.)

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ers and their employers. As the program
was originally structured by the Social Se –
curity Act of 1935, people would earn ben –
e½ts as they continued to work. If death
occurred before age sixty-½ve, or before
they received what they paid into the sys-
tem even after retirement, their estate
would receive the difference plus interest
in the form of a one-time lump-sum pay-
ment. At the program’s inception, no ben –
e½ts were provided to spouses or children.
Although Social Security was originally
designed to protect a limited number of
American workers against loss of earnings,
President Roosevelt indicated from the
start that the program was expected to
grow and evolve with changing economic
and demographic conditions.3 The ½rst
study published by the Of½ce of the Actu-
ary at the Social Security Board claimed
that “when it is realized that too large a
proportion of the population would prob –
ably be left idle with a retirement age of 65,
the general feeling will undoubtedly be
that a constant retirement age should be
banished, or that it should be left as a bal-
ancing item.”4 A subsequent publication
by Robert J. Myers, Chief Actuary and Dep –
uty Commissioner of the ssa–from which
we quote in our epigraph–made a more
forceful statement about raising the Social
Security Retirement age.5

Social Security has evolved extensively
since its inception. While the program is
best known for providing ½nancial assis-
tance to retirees, amendments to the pro-
gram also added life insurance, payments
for spouses and dependents, and disability
bene½ts for those who are unable to work
but are not yet eligible by age for regular
bene½ts. The ½rst signi½cant change to the
program was introduced in 1939, quand
Con gress passed amendments to change
the ½nancing of the program so that work –
ers paid into Social Security incrementally
as they worked, allowing for immediate
pay ments of bene½ts without increasing

Social Security tax rates.6 Coverage was
also extended to dependents of retired
work ers or workers who died prematurely.
Dans 1948, bene½ts to dependents, survivors,
and those with severe and long-lasting dis –
ability were increased or extended and cov –
erage was expanded considerably.7 In 1950,
a revised schedule of gradual increases in
tax rates for employers and employees was
implemented to increase the likelihood
that Social Security would remain self-
supporting; coverage was also extended
to several additional major categories of
workers such as farmers and government
workers.8 Legislation in 1954 et 1956 ex –
tended coverage to 90 percent of all work –
ers, and coverage became nearly universal
in the early 1960s.9 The eligibility age for
Social Security was reduced from age 65 à
âge 62 for women in 1956 and for men in
1961, and automatic cost-of-living adjust-
ments were authorized in 1972.10 Enfin,
in direct response to gains in life expectan-
cy and improvements in health (increases
in active and disability-free–or what we
prefer to call “healthy”–life expectancy)
since the program began, amendments ap –
proved in 1983 authorized gradual increas-
es in the age of full eligibility for workers
born after 1937, with provisions fully ef –
fective for all workers born after 1959.11

These amendments gradually increased
the age of eligibility for full Social Security
bene½ts from 65 à 67 and lowered the ben –
e½ts for those who choose to begin receiv-
ing them early (entre 62 and the full re –
tirement age). There have been no lon –
gevity- or health-related adjustments to
the retirement age since 1983. It is also im –
portant to emphasize that, aujourd'hui, approx-
imately 72 percent of new bene½ciaries
draw bene½ts before the full retirement age
et 46 percent draw bene½ts at the earliest
possible age of 62.12 Despite the program’s
evolution, donc, the question remains
whether eligibility changes have kept pace
with the substantial gains in life expec –

S. Jay
Olshansky,
Dana P.
Homme d'or
& John W.
Rowe

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144 (2) Spring 2015

Resetting
Social
Sécurité

tancy and healthy life expectancy that have
occurred since the program’s inception
et, en effet, since the last retirement-age
adjustment in 1983.

The current debate about raising the age
of ½rst eligibility above 62 and the age of
full-bene½t eligibility above 67 has been
driven by a combination of factors, inclure –
ing: ½nancial stress placed on the solvency
of the Social Security trust fund by a much
larger number of bene½ciaries than antic –
ipated (in turn caused by an unexpected
baby boom and larger-than-anticipated in –
creases in life expectancy); a substantial
proportion of bene½ciaries who elect early
bene½ts; political reluctance to increase
payroll taxes; and a growing number of
very long-living older people who depend
fully or nearly so on Social Security (called
“longevity risk”). Aujourd'hui, two-thirds of
ben e½ciaries rely on Social Security for
more than half of their total income, et
25 percent rely on it for over 90 percent of
their total income.13 The shift toward re –
tirees relying fully on the program for ½ –
nancial support was neither anticipated
nor intended at the program’s inception.
Taken together, these considerations
lead to the four central questions we ad –
dress in this essay:

1) How well did the two-year increase in
eligibility age for full retirement bene½ts
from the 1983 amendments correspond to
the proportional rise in life expectancy at
âge 65 depuis 1935 à 1983?

2) From a demographic perspective, does
the rise in life expectancy at older ages
observed since 1983 warrant a further ad –
justment to the age of eligibility for early
and full Social Security bene½ts?

3) How would subgroups of the U.S. pop –
ulation with different survival prospects
be differentially influenced by further in –
creases in the age of early and full retire-
ment ages?

4) And what would the early and full re –
tirement ages be today if they had been

indexed directly to rising life expectancy
since the program’s inception, maintaining
a constant proportion of adult life spent
working to life spent in retirement?14
Improvements in health care and increas-

es in well-being at older ages have accel-
erated in the United States since Social Se –
c urity began in 1935 with a set retirement
age of 65. À ce moment-là, the average expec –
ted remaining years of life for someone
reaching age 65–notated as e(65)–for men
and women combined in the United States
était 12.6 années, and the probability of sur-
viving to age 65 (averaged for men and
wom en) conditional on having survived to
âge 25 (referred to as “conditional sur-
vival”) était 62.4 pour cent (Tableau 1). Par 1983,
e(65) for the total population had risen to
16.6 années (meaning that each year during
this time frame, 30 days were added to the
life of a person reaching 65 years of age),
while conditional survival to age 65 rose
à 79.4 pour cent. Entre 1983 et 2009,
life expectancy past 65 rose an additional
2.3 years to 18.9, which means that the
annual increase in life expectancy accel-
erated to 31.8 extra days added to the life
of a 65-year-old per year; conditional sur-
vival to age 65 also increased to 84.8 par-
cent between 1983 et 2009.

Since many bene½ciaries now retire at
the earliest possible retirement age of 62,
it is worth noting that e(62) increased by 4.3
years between 1935 et 1983, and by 2.5
years between 1983 et 2009 (see Table 1).
This means 32 additional days of life were
added each year to those reaching age 62
depuis 1935 à 1983, et 35.2 additional days
of life were added each year for those
reach ing age 62 depuis 1983 à 2009.

Conditional survival to the full Social
Sec urity retirement age of 65 varies consid –
erably by sex and level of completed educa –
tion; trends in conditional survival be –
tween 1990 et 2008 reveal large differ enc –
es among population subgroups (Tableau 2).

Dédale, le Journal de l'Académie américaine des arts & les sciences

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Tableau 1
U.S. Life Expectancy at Age 62 [e(62)], Life Expectancy at Age 65 [e(65)], et
Conditional Survival from Age 25 to Age 65 [S(25–65)], by Sex; 1935, 1983, 2009

e(62)

e(65)

S(25–65)
M F T

1935
1983
2009

M F T M F T
13.6 15.1 14.4 11.9 13.2 12.6 59.5 67.3 63.3
16.3 20.9 18.7 14.3 18.6 16.6 74.8 85.7 80.2
19.7 22.6 21.2 17.5 19.9 18.9 81.9 88.7 85.3

S. Jay
Olshansky,
Dana P.
Homme d'or
& John W.
Rowe

M = Male; F = Female; T = Total (average). Source: U.S. Social Security Administration, Historical Life Tables
developed by the Of½ce of the Chief Actuary for use in estimates and analysis in The 2013 Annual Report of the
Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (2014); voir
http://www.ssa.gov/oact/TR/2013/tr2013.pdf.

Tableau 2
Percent of Total U.S. Population Surviving to Age 65 Conditional on Having Survived to Age 25,
by Level of Completed Education; 1990, 2008

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Years of Education at Age 25

<12 12 13–15 16+ 1990 2008 75.7 74.4 78.3 78.7 88.1 89.2 86.0 92.1 Source: Calculations done by the MacArthur Foundation Research Network on an Aging Society. In 1990, only 75.7 percent of 25-year-old men and women with less than a high school education were expected to reach age 65. In contrast, about 87 the most highly educated 25-year-olds in that year survive age In 2008, least experienced a slight reduction survival 65 (down to 74.4 percent) while most ed - ucated signi½cant additional improvement (to 92.1 percent). Condition- al increased from 1990 through 2008 as function level completed education; biggest jump oc - curred among those who have any college education. Thus, 25.6 least educated subgroup population will not live long enough draw retirement ben e½ts Social Security at current eli - gibility ages. 5.9 percent of group will die before the early retirement age. The observed full 67 mandated 1983 not be implemented until 2027. If had been indexed exclusively e(65) (that is, if the was raised pro- portion increase life expectancy at using 10-year moving average), a full 67.7 would been justi½ed (see Figure 1). re - tirement again 2009 to life expectancy 65, tirement age 69.4 been jus ti½ed. And 144 (2) Spring 2015 71 >
Resetting Social Security image

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