Lower-income workers don’t live as long as higher earners, and reforms to accommodate longer life spans in the overall population would also reduce their lifetime benefits, new research finds.
A report published on Monday by the U.S. Government Accountability Office (GAO) examines the impact of possible policy changes, such as raising the retirement age, intended to address the fact that average life expectancies are increasing.
“As life expectancy has not increased uniformly across all income groups, proposed actions to address the effects of longevity on programs and plan sponsors may impact lower-income and higher-income individuals differently,” the GAO says in announcement accompanying the report’s release.
Although people are living longer overall, the research notes that life expectancy varies substantially across different groups. For example, lower-income men who are approaching retirement live 3.6 to 12.7 fewer years than higher-income men, on average, the GAO report says.
The research finds that actions to address longer life spans would reduce the total benefits collected by lower-income workers over their lifetimes. Under hypothetical scenarios developed to calculate projected lifetime Social Security benefits, the report finds that lower-income groups’ shorter-than-average life expectancy reduced their projected lifetime benefits by as much as 11% to 14%.
“Effects on Social Security retirement benefits are particularly important to lower-income groups because Social Security is their primary source of retirement income,” the report adds.
The GAO does not make any recommendations in the report.