Social Security Data Overestimate Early Retirement

Social Security analysis is not accurately portraying when people retire, says a brief by the Center for Retirement Research (CRR) at Boston College.

Social Security’s claim year analysis does not accurately take into account the claiming behavior of individuals, according to the brief.

According to claim analysis, the group of people claiming Social Security benefits at age 62 has been falling since the mid-“90s. Yet the brief asserts that this data is misleading, as the proportion of people claiming benefits early has not changed over the years.

In order to uncover that information, the analysis took into consideration both claim year data and the behavior of cohorts, or segments of people by age.

In the past, the brief says both claim year analysis and cohort analysis provided reasonable estimates of those claiming benefits at any age, but the changing landscape of retirement has caused differences. The claim year analysis masks changes in claiming behavior by overestimating the proportion of retirees claiming benefits at 62.

As the Boomers approach retirement in larger numbers, the differences are likely to be amplified, then eventually stabilize, the brief says. “As the retirement income system contracts, now more than ever, it is necessary to measure Social Security beneficiaries’ claiming behavior accurately,” the brief reads.

The good news is that CRR’s data show that more people are claiming retired-worker benefits at later ages—consistent with increased labor force participation at older ages, the brief says. Yet in 2006, 46% of insured workers still claimed Social Security benefits as soon as they became eligible.

The full brief is available here.