Allow Social Security beneficiaries to collect half of their benefits as early as age 62, and the other half at a later age.  Also, direct the Social Security Administration to design a  hardship exemption for those who cannot work past 62 but who do not qualify for disability benefits. 

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As workers approach retirement they are faced with varying needs, and different retirement patterns make sense for different workers and their families. In recognition of these diverse experiences, the Commission’s proposal introduces significant new flexibilities and protections in addition to an indexed retirement age. 

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First, the Commission proposes allowing beneficiaries to collect up to half of their benefits as early as age 62, with applicable actuarial reduction, and the other half at a later age (therefore incurring a smaller actuarial reduction).  This increased flexibility should provide for a smoother transition for those interested in phased retirement, or for households where one member has retired and another continues to work. 

 

Second, we propose a hardship exemption for those who may not qualify for disability benefits, but are physically unable to work beyond the current EEA.  A RAND analysis reported that 19 percent of early retirees claimed a work-limiting health condition that would have limited their ability to continue in the paid labor force.  To protect this population, the Commission proposal sets aside adequate resources to fund a hardship exemption for up to 20 percent of retirees.  This exemption would allow beneficiaries to continue to claim benefits at age 62 as the EEA and NRA increase, and hold them harmless from additional actuarial reduction resulting from increased NRA.  The Commission is charging the Social Security Administration with designing a policy over the next ten years that best targets the population for whom an increased EEA poses a real hardship, and considering relevant factors such as the physical demands of labor and lifetime earnings in developing eligibility criteria. 

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At the same time, the Commission recommends eliminating a provision that allows retirees who claim benefits early to withdraw a benefit application and return benefits received – even years after claiming – without paying interest or inflation, before reapplying for benefits at a later age and with a smaller actuarial reduction.  This loophole is in effect an interest-free loan for wealthier retirees able to take advantage of it. 

 

 

 

 

 

 

 

 

Evidence:

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United States.  White House.  "The National Commission on Fiscal Responsibility and Reform."  December 2010