Changing Social Security: Who’s Affected?

Nov 13, 2020 / Amanda Chase, Horsesmouth Assistant Editor

Due to the strength and agility required for physical labor, half of blue-collar workers sign up for Social Security as soon as they’re eligible—at age 62. But a large majority of white-collar workers wait so they can lock in a larger monthly check for retirement. In a new study, Lindsay Jacobs at the University of Wisconsin found that blue- and white-collar workers would also respond very differently to potential increases in the program’s two benchmark ages: the earliest eligibility age and the full retirement age.

The first change—raising Social Security’s earliest claiming age—would require a much bigger adjustment by blue-collar workers. Jacobs predicted that this group would respond by working an extra year, on average, compared with a few more months for white-collar workers. Requiring workers to wait longer for their benefits does have a financial advantage: a larger Social Security check every month. The problem for some blue-collar workers is that they couldn’t make it to 64. One result, then, is that increasing the early retirement age would push up applications to Social Security’s disability program, according to the study funded by the Retirement and Disability Research Consortium.

The second possible change would increase the full retirement age by two years, which amounts to an across-the-board cut in benefits regardless of when workers claim them. In response, white-collar workers, who are already more inclined to hold out until the full retirement age, would be more likely to work even longer to reach the new, higher benchmark age. But blue-collar workers would bear the brunt of the benefit cuts, because their physically demanding jobs would often prevent them from working longer to offset the cuts.

When weighing various changes to Social Security, it’s important to remember that blue-collar workers have less leeway to adjust to a change in the rules.

You can find this article, and a link to Jacobs’s study here.

 

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