Raising the Social Security Entitlement Age.

Area of Science:

• Economics
• Demographics
• Public Policy

Background:

• The aging population in America presents both challenges and opportunities, including substantial social and economic contributions.
• Understanding the financial implications of an aging demographic is crucial for fiscal planning and policy development.

Purpose of the Study:

• To quantify public revenues and expenditures related to Americans aged 65 and older.
• To estimate the value of unpaid productive activities and financial gifts provided by this demographic.
• To project the impact of changes in Old Age and Survivors Insurance eligibility ages on these financial aspects through 2050.

Main Methods:

• Microsimulation modeling was employed to project future values.
• Analysis included government revenues, expenditures, unpaid activities, and financial transfers.
• Scenarios focused on altering the Old Age and Survivors Insurance eligibility age.

Main Results:

• In 2010, unpaid productive activities and financial gifts from those 65+ were valued at US$721 billion.
• Net government spending on individuals 65 and older was US$984 billion in 2010.
• A five-year delay in full retirement age could decrease federal spending by 10%; a two-year delay in early entitlement age could increase it by 1.5%.

Conclusions:

• Policy adjustments to retirement age significantly influence federal spending on the elderly.
• Changes in retirement age have a relatively small impact on the value of unpaid activities and intergenerational transfers.
• The economic and social contributions of older Americans warrant careful consideration in fiscal policy discussions.