Raising the Social Security Entitlement Age

An aging America presents challenges but also brings social and economic capital. We quantify public revenues from, and public expenditures on, Americans aged 65 and older, the value of their unpaid, productive activities and financial gifts to family. Using microsimulation, we project the value of these activities, and government revenues and expenditures, under different scenarios of change to the Old Age and Survivors Insurance eligibility age through 2050. We find the value of unpaid productive activities and financial gifts are US$721 billion in 2010, while net (of tax revenues) spending on the 65 years and older is US$984 billion. Five-year delay in the full retirement age decreases federal spending by 10%, while 2-year delay in the early entitlement age increases it by 1.5%. The effect of 5-year delay on unpaid activities and transfers is small: US$4 billion decrease in services and US$4.5 billion increase in bequests and monetary gifts.