Raising the Social Security Retirement Age Might Shift Older Workers Onto Disability Rolls, Report Says

By Susan Jones | November 29, 2010 | 11:40 AM EST

(CNSNews.com) – Raising the age at which retirees are eligible to receive their Social Security benefits would likely increase the number of workers applying for and receiving Social Security disability benefits, the General Accountability Office recently reported.

The Social Security Board of Trustees has projected that the retirement and disability funds will be exhausted by 2037 as life expectancy and the number of senior citizens both rise.

Improvements in life expectancy have led to proposals to raise the earliest eligibility age (EEA) above 62, the full retirement age (FRA) above 67, or both. Workers who choose to begin receiving Social Security retirement benefits as early as age 62 get lower payments than those who wait for the full retirement age, which will rise to 67 under reforms passed in 1983.

Given the looming financial crisis, some have suggested raising the earliest eligibility age (EEA) at which workers first qualify for retirement benefits, the full retirement age (FRA) at which they receive full benefits, or both.

Raising the retirement age could create an incentive for workers to delay retirement, thus earning more income and possibly saving more for retirement, the GAO reported on Nov. 18, 2010. But it probably would result in more disability applications and beneficiaries, reducing some of the financial savings for the Social Security and Disability trust funds.

It also would increase the Social Security Administration’s disability caseload, which already faces a serious backlog, the GAO reported.

Specifically, the GAO found that raising the EEA (earliest eligibility age) would delay workers’ eligibility for retirement and might cause workers to apply for Social Security Disability Insurance benefits instead of working longer.

Raising the FRA (full retirement age) would reduce benefits for early retirees, creating a financial incentive to apply for Social Security Disability Insurance over retirement benefits.