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Retirement Plans

Improved mortality means Social Security benefiting higher earners more – CRR brief

Improvements in mortality are changing Social Security's progressive design intended to benefit lower earners, according to an issue brief released Tuesday by the Center for Retirement Research at Boston College.

Matthew S. Rutledge, a research economist at CRR, noted in the issue brief that average life expectancy at age 65 has increased by six years for men and four years for women in the last 50 years, but people with lower socioeconomic status "have seen relatively small improvements."

A review of research finds that the widening gap in life expectancy is due in part to improved health outcomes for higher earners. One study included in the brief also found that lower earners live longer in areas with greater income disparities, possibly because of exposure to behavioral norms or more robust tax bases that enable more government spending on health care and the environment.

As the mortality gap between income levels increases, higher earners are receiving Social Security benefits for a longer time. That has significantly reduced — though not eliminated — the overall progressivity of the Social Security program, which was designed to help lower earners the most. The research brief cites a 2017 National Academy of Sciences report that found benefits for men in the highest income quartile increasing to $295,000 for those born in 1960 from $229,000 for those born in 1930, while benefits for men in the two lowest income quartiles fell or increased modestly.

Improved mortality also came up Tuesday as the confirmation hearing for Supreme Court nominee Brett Kavanaugh began in the Senate Judiciary Committee. According to an actuarial analysis by Oliver Wyman, increasing longevity also means fewer court vacancies and fewer opportunities for future presidents to appoint a justice. Many of the current justices "are not likely to be going anywhere for two or three decades" and presidents who do get an opportunity to appoint a justice "will be able to leave a mark on the court for many years after their time in the White House," the analysis said.