How Changes in Social Security Affect Recent Retirement Trends

Descriptive data from the Current Population Survey (CPS) suggest that men aged 65 to 69 years were about 6 percentage points less likely to be retired in 2004 than in 1992, and data from the CPS and the Health and Retirement Study suggest a corresponding difference of 3 percentage points between 1998 and 2004. Changes in Social Security rules that were phased in between 1992 and 2004 increase full-time work by those aged 65 to 67 by a bit less than 2 percentage points, raising full-time work by those aged 65 to 67 by about 9%. Altogether, the changes in Social Security benefits increase labor force participation by those aged 65 to 67 by between 1.4 and 2.2 percentage points, or 2% to 4%, depending on age. About one sixth of the increase in labor force participation between 1998 and 2004 for married men aged 65 to 67 is due to changes in Social Security.