Can the actuarial reduction for Social Security early retirement still be right?

Abstract

The brief's key findings are: (1) Monthly Social Security benefits claimed at age 62, rather than 65, are reduced about 20 percent to avoid additional costs to the program. (2) When the reduction was set over 50 years ago, a worker claiming at 62 received benefits about 20 percent longer. As life expectancy has risen, this worker now receives benefits only about 15 percent longer. (3) But the cost of benefits, the present discounted value of lifetime benefits, also depends on interest rates. Rates have generally risen since the 1960s, making future benefits less costly. (4) These higher rates have largely offset the impact of rising life expectancy, suggesting that the reduction factor has proven remarkably durable over time.