The Impact on Inequality of Raising the Social Security Retirement Age

This paper examines the impact of an increase in the retirement age on various demographic groups. Treating future social security benefits as a form of wealth, it projects the impact of a gradual increase in the normal retirement age from 67 to 70 (2 months a year for 18 years) on each quintile of the wealth distribution using data from the Federal Reserve Board’s 2007 Survey of Consumer Finances. It constructs separate projections for homeowners and non-homeowners, single individuals and couples in the age cohorts 35-44, 45-54, and 55-64. The authors conclude that a reduction in social security benefits will have the effect of increasing inequality.

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