How Have People Responded to Changes in the Retirement Earnings Test in 2000?

by Jae G. Song and Joyce Manchester
Social Security Bulletin, Vol. 67 No. 1, 2007
Table equivalent for Chart 1. Rates of work participation and benefit entitlement, by age group, 1996–2003 (in percent)
Year Turning ages 62–64 Turning age 65 Attained ages 65–69 Attained ages 70–72
Work participation
1996 52.33 40.52 26.30 15.79
1997 53.43 42.00 27.27 16.45
1998 53.98 42.93 28.32 17.17
1999 54.66 43.52 29.22 17.60
2000 55.67 44.85 30.72 18.87
2001 55.73 45.09 31.43 18.87
2002 55.39 45.13 31.85 19.48
2003 55.38 44.76 32.09 19.56
Benefit entitlement
1996 55.18 85.59 89.78 91.87
1997 54.19 85.21 89.60 91.94
1998 53.74 84.67 89.35 92.02
1999 53.30 85.26 89.38 92.04
2000 52.87 89.76 90.63 92.15
2001 51.93 89.27 91.00 91.81
2002 50.49 88.84 90.98 91.98
2003 48.65 85.38 91.18 91.96
SOURCE: Authors' tabulations using the 1 percent extract of the Social Security Administration's Master Earnings File and Master Beneficiary Record.
Table equivalent for Chart 2. Beneficiaries becoming entitled during each year, 1996–2003 (in percent)
Year Turning ages 62–64 Turning age 65 Attained ages 65–69 Attained ages 70–72
1996 33.92 20.73 1.13 0.62
1997 33.06 20.88 1.09 0.23
1998 32.91 21.92 1.19 0.13
1999 32.27 22.13 1.45 0.10
2000 31.84 27.69 2.66 0.12
2001 32.03 27.60 0.69 0.08
2002 30.80 27.39 0.57 0.12
2003 29.66 25.04 0.83 0.13
SOURCE: Authors' tabulations using the 1 percent extract of the Social Security Administration's Master Earnings File and Master Beneficiary Record.
Table equivalent for Chart 3. Probability of transition from not working in t1 to working in t2 and from not entitled in t1 to entitled in t2, by age at the end of t1 (in percent)
Age at end of t1 t1=1996
t2=1997
t1=1997
t2=1998
t1=1998
t2=1999
t1=1999
t2=2000
t1=2000
t2=2001
t1=2001
t2=2002
t1=2002
t2=2003
Not working in t1 to working in t2
65 16.58 17.36 17.73 19.44 19.35 18.37 18.40
66 14.75 15.91 16.20 18.10 17.74 17.08 16.32
67 13.30 13.89 14.10 16.23 15.56 14.57 14.95
68 11.10 12.01 11.99 13.70 13.86 13.46 13.01
69 9.97 10.41 11.01 11.57 11.69 11.16 11.19
Not entitled in t1 to entitled in t2
65 1.76 1.96 2.62 4.72 0.75 0.86 1.32
66 0.97 1.06 1.2 2.96 0.59 0.37 0.85
67 0.72 0.69 1.06 2.0 0.48 0.27 0.35
68 0.65 0.67 0.74 1.61 0.5 0.42 0.41
69 1.24 1.49 1.52 1.74 1.09 0.87 1.12
SOURCE: Authors' tabulations using the 1 percent extract of the Social Security Administration's Master Earnings File and Master Beneficiary Record.
Table equivalent for Chart 4. Nominal earnings of the two age groups affected by the rule change, by earnings percentile, 1996–2003 (in thousands of dollars)
Percentile 1996 1997 1998 1999 2000 2001 2002 2003
Those turning age 65
40th 7.800 8.174 9.000 9.138 10.263 10.850 11.618 12.285
50th 10.562 11.196 12.479 12.313 14.609 15.300 16.606 17.200
60th 14.494 15.149 16.972 16.214 19.931 21.330 22.747 23.894
70th 22.185 23.008 24.651 23.918 27.825 28.564 30.200 31.986
80th 32.206 33.065 35.825 35.247 38.596 39.082 41.564 44.174
Those who have attained aged 65–69
40th 5.754 5.888 6.264 6.639 6.984 7.875 8.304 8.787
50th 7.884 8.207 8.586 9.111 9.600 10.791 11.497 12.250
60th 10.400 10.912 11.359 11.997 12.750 14.468 15.508 16.737
70th 12.766 13.551 14.437 15.394 17.000 19.602 21.337 23.120
80th 21.549 22.208 22.632 23.652 25.354 28.824 30.882 33.023
SOURCE: Authors' tabulations using the 1 percent extract of the Social Security Administration's Master Earnings File and Master Beneficiary Record.
Table equivalent for Chart 5. Probability of an increase in earnings between t1 and t2 for those aged 65–69, by age at end of t1 (in percent)
Age at end of t1 t1=1996
t2=1997
t1=1997
t2=1998
t1=1998
t2=1999
t1=1999
t2=2000
t1=2000
t2=2001
t1=2001
t2=2002
t1=2002
t2=2003
Earnings at t1 are greater than or equal to zero
65 16.58 17.36 17.73 19.44 19.35 18.37 18.40
66 14.75 15.91 16.20 18.10 17.74 17.08 16.32
67 13.30 13.89 14.10 16.23 15.56 14.57 14.95
68 11.10 12.01 11.99 13.70 13.86 13.46 13.01
69 9.97 10.41 11.01 11.57 11.69 11.16 11.19
Earnings at t1 are greater than zero
65 14.38 15.26 15.41 16.65 17.36 16.53 16.38
66 12.68 13.66 14.17 15.18 15.92 15.22 14.33
67 11.27 12.01 12.16 13.85 13.86 12.84 13.04
68 9.52 10.51 10.42 11.39 12.36 11.93 11.42
69 8.56 8.93 9.29 9.64 10.09 9.92 9.87
SOURCE: Authors' tabulations using the 1 percent extract of the Social Security Administration's Master Earnings File and Master Beneficiary Record.
Table equivalent for Chart 6. Estimates of the effects on earnings, by percentile and year (in thousands of dollars)
Percentile 1997 1998 1999 2000 2001 2002 2003
Those who have attained aged 65–69
10th 0.00056 0.03683 -0.02053 0.02908 -0.07619 -0.00565 -0.11714
20th -0.20244 -0.29371 -0.34971 -0.32041 -0.53094 -0.44509 -0.54072
30th -0.16369 -0.36904 -0.47323 -0.67247 -0.63701 -0.74058 -0.9167
40th -0.34477 -0.52449 -0.59893 -0.5643 -0.6323 -0.69133 -0.92513
50th -0.31006 -0.65198 -0.67478 -0.48731 -0.24625 -0.28436 -0.34423
60th -0.32557 -0.36787 -0.31126 0.13524 0.46723 0.80307 0.869911
70th -0.25869 -0.61414 -0.81221 -0.23893 0.533749 1.039548 1.249459
80th -0.21848 -0.75587 -0.99323 -0.65697 0.746954 0.985767 1.06506
90th -0.15816 -1.30889 -1.83359 -2.23557 -1.32472 -1.42702 -1.45545
Those turning age 65
10th 0.17485 0.20848 0.2435 0.19588 0.31106 0.18193 0.26088
20th 0.194055 0.384275 0.23257 0.410235 0.339365 0.396805 0.47337
30th 0.27262 0.29078 0.08286 0.317939 0.081929 0.32398 0.36899
40th 0.1762 0.2872 0.127579 0.99647 0.484259 0.744749 0.75802
50th 0.051597 0.041761 -0.27601 1.532 1.445913 2.27664 2.035078
60th 0.049531 0.547431 -0.54001 1.70617 1.759881 2.538312 2.399152
70th -0.2506 0.589625 -1.3417 1.278448 1.159056 1.625686 2.544241
80th -0.77987 -0.09979 -1.45721 0.711451 -0.22342 0.035698 0.415678
90th -1.59195 -0.27562 -1.87307 0.257538 -1.05071 -0.53049 0.260109
SOURCE: Authors' estimates.