Aching to Retire? The Increase in the Normal Retirement Age and Its Impact on the Disability Rolls

Mark G. Duggan, University of Maryland
Perry Singleton, University of Maryland
Jae Song, U.S. Social Security Administration (SSA)

In 1983 the federal government passed legislation that gradually increased the age at which individuals can receive full social security retirement benefits from 65 to 67 and reduced the generosity of benefits available at the early retirement age of 62. No corresponding changes were made to social security disability insurance (DI) benefits. Once fully phased in, these changes will substantially increase individuals' financial incentives to apply for DI benefits. In this paper we use administrative data from the Social Security Administration to estimate the effect of this change on DI enrollment. Our findings indicate that the policy has contributed to the recent growth in the disability rolls with the effect concentrated among 63 and 64 year old men. Once the policy is fully phased in our estimates suggest that DI enrollment for this group of near-elderly men will increase by 1.6 percentage points (13 percent).