How a higher retirement age would hurt low-income workers

One in five workers claim Social Security at 62 while still on the job because they need the money.

Should you keep working as you get older, or retire and claim Social Security when you first become eligible for benefits? Some people do both, and not necessarily by choice.

Twenty percent of older workers claim Social Security as soon as they become eligible at age 62 - and while they are still working, according to new research by the Schwartz Center for Economic Policy Analysis at the New School in New York. The finding challenges the longstanding belief that the decision on when to claim Social Security revolves around retirement, according to Teresa Ghilarducci, director of the center and co-author of the study.

Ghilarducci found that low-income older workers are more than three times as likely as high-income workers to claim early, relying on Social Security to supplement their wages - and not because they are misinformed about the benefits of later claiming. “Most of them are doing it because they need the money to supplement their low wages and maintain their standard of living,” she said.

The finding is striking because one possible policy solution to the looming shortfall in Social Security revenue is an increase in the full retirement age (FRA) - that is, the point when workers can receive 100% of the benefit they have earned.

Learn more in my latest Reuters column.

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My latest book is now available as an audiobook!

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