Raising Retirement Age Disproportionately Hurts Poor

More years of their lives are spent working, while fewer are spent collecting government benefits compared to the rich

The rich are increasingly outliving the poor, meaning policies aimed at delaying retirement could disproportionately hurt low socioeconomic status workers, new research shows.

Using level of educational attainment as a proxy for socioeconomic status, Boston College's Center for Retirement Research found a 2.5 percent and 1.2 percent improvement in mortality per year from 1979 to 2011 for the most educated men and women, respectively. That compares with a 1.5 percent and 0.5 percent improvement for the least educated. 

"Over the last 30 years, just as there have been increases in income inequality, there have been increases in mortality inequality," said Geoffrey Sanzenbacher, a research economist at Boston College and lead author of the study. "People who are poor have always lived less long than people who are richer, and that’s actually gotten worse over the last three decades." 

Individuals in the highest quartile of educational attainment can work a full one to two years longer than those in the bottom quartile and still maintain the same work-to-retirement ratio as in 1979, Sanzenbacher said. Low earners meanwhile would lose ground, spending a comparatively higher share of their lives at work.

The research supports Social Security Administration data that used income to measure socioeconomic status and that show an even more pronounced disparity that has widened over time.  In 1977, a 65-year-old male earning an above-average income could expect to live another 16 years, to 81. That increased to 87 years by 2006. Meanwhile for his counterpart with below- average earnings, longevity increased just about one year in that period, from 80 years to 81 years.

A disproportionately longer period of retirement means more years of collecting Social Security, Medicare and other government benefits for higher socioeconomic groups. That adds a new dimension to the debate about rising income inequality in the U.S.

"Social Security and Medicare are supposed to be progressive programs," Sanzenbacher said. "This inequality makes those programs less progressive, because the rich get to enjoy them longer.”

(Corrects spelling of name in last paragraph.)

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