Impact of the Social Security Retirement Earnings Test on 62-64 Year-Olds

56 Pages Posted: 25 Jan 2013

See all articles by Caroline E. Ratcliffe

Caroline E. Ratcliffe

The Urban Institute - Labor and Social Policy Center

Jillian Berk

Independent

Kevin Perese

U. S. Congressional Budget Office (CBO) - Long-Term Modeling Group

Eric J. Toder

Urban Institute

Date Written: December 3, 2003

Abstract

This paper by the Urban Institute explores the impact of the RET on individual behavior. The RET may affect two personal decisions: (1) how many hours to work (including leaving the workforce); and (2) at what age to start claiming Social Security benefits. The RET may discourage a certain group of older citizens from working. This is the group of workers aged 62 to 64 who already receive Social Security benefits and who have labor income just below the RET or between the RET threshold and the point at which the RET completely taxes away the individual’s Social Security benefit. Higher earners may be affected in the opposite direction: removing the RET would allow them to receive Social Security benefits for the first time, and this might lead some high earners to cut back on their work hours. The RET may also discourage workers from taking up Social Security benefits at ages below the NRA, because it temporarily taxes away some part of Social Security benefits. These behavioral questions have important implications for the present, and future, total incomes of workers between the ages of 62 and 64 who may be subject to the RET. The goal of this paper is to examine these potential behavioral changes and the relative importance of work effort and Social Security take-up decisions to total income levels.

Suggested Citation

Ratcliffe, Caroline E. and Berk, Jillian and Perese, Kevin and Toder, Eric J., Impact of the Social Security Retirement Earnings Test on 62-64 Year-Olds (December 3, 2003). Available at SSRN: https://ssrn.com/abstract=2206445 or http://dx.doi.org/10.2139/ssrn.2206445

Caroline E. Ratcliffe (Contact Author)

The Urban Institute - Labor and Social Policy Center ( email )

2100 M Street, NW
Washington, DC 20037
United States
202-261-5548 (Phone)
202-463-8522 (Fax)

Jillian Berk

Independent

No Address Available

Kevin Perese

U. S. Congressional Budget Office (CBO) - Long-Term Modeling Group ( email )

Ford House Office Building
2nd & D Streets, SW
Washington, DC 20515-6925
United States
202-226-5667 (Phone)
202-225-7509 (Fax)

Eric J. Toder

Urban Institute ( email )

Urban Institute
2100 M Street NW
Washington, DC 20037
United States
2022615577 (Phone)

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