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The impact of late-career health and employment shocks on Social Security and other wealth
The impact of late-career health and employment shocks on Social Security and other wealth
- Collection:
- Health Policy and Services Research
- Series Title(s):
- Center for Retirement Research working paper
- Contributor(s):
- Johnson, Richard W.
Mermin, Gordon B.T.
Murphy, Dan.
Boston College. Center for Retirement Research. - Publication:
- Chestnut Hill, MA : Center for Retirement Research at Boston College, c2007
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Catastrophic Illness
Employment
Income -- statistics & numerical data
Retirement -- statistics & numerical data
Social Security -- statistics & numerical data
United States - Genre(s):
- Technical Report
- Abstract:
- Although health and employment shocks are fairly common at older ages and often derail retirement savings plans, Social Security's disability insurance, spouse and survivor benefits, and progressive benefit formula may provide important protections. By contrast, traditional employer-sponsored pension benefits may be especially vulnerable to health and employment shocks immediately before benefit take-up, because pension wealth generally grows rapidly near the end of the career and workers forfeit these increases if they separate early. This study examines the impact of disability onset and job layoffs on Social Security wealth, traditional employer-sponsored pension wealth, and other household wealth for a nationally representative sample of workers age 51 to 55 in 1992. One-quarter of workers in the sample develop health-related work limitations before age 62 and just more than one-fifth are laid off from their jobs. Regression results show that job layoffs significantly reduce Social Security wealth accumulation, but health shocks increase Social Security wealth, primarily because the system's disability insurance allows some disabled workers to collect benefits before age 62. If Social Security's disability insurance program did not exist, the onset of health-related work limitations would reduce Social Security wealth growth between 1992 and 2004 by about $3,800, equal to about 12 percent of the average growth over the period. If spouse and survivor benefits and the progressive benefit formula were also eliminated, the negative impact of health shocks would jump to about $7,900, equal to about 19 percent of the average wealth change.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
- Extent:
- 35 p.
- NLM Unique ID:
- 101468708 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/101468708