In addition to the NAS work ( The Growing Gap in Life Expectancy by Income: Implications for Federal Programs and Policy Responses, 2015 ), in 2016 the Government Accountability Office (GAO; Retirement Security: Shorter Life Expectancy R educes Projected Lifetime Benefits for Lower Earners ), the Brookings Institution ( Later Retirement, Inequality in Old Age, and the Growing Gap in Longevity B etween Rich and Poor ), and Stanford economist Raj Chetty and colleagues ( The Association Between Income and Life Expectancy in the United States, 2001-2014 ) all published new evidence on the growing gap in life expectancy. Social Security provides monthly benefits to retired and disabled workers and their dependents, and to dependents of deceased workers. The goals of Social Security, a redistributive program, may be compromised by widening gaps in life spans. When Social Security retirement benefits are measured on a lifetime basis, low earners, who show little to no gains in life expectancy over recent decades, are projected to receive relatively smaller benefits when compared with high earners. A commonly discussed Social Security reform proposal in the United States involves increasing the retirement age, which would affect low earners' lifetime benefits disproportionately. Congress may wish to reevaluate this type of reform proposal in light of the growing gap in life expectancy by income and may be interested in policy proposals that protect the interests of lower-earning, shorter-lived workers, for example. This report provides a brief overview of the concept of life expectancy, how it is measured, and how it has changed over time in the United States. While life expectancy may be studied in a variety of contexts, this report focuses on the link between life expectancy and socioeconomic status (SES), as measured by lifetime income. In particular, this report synthesizes recent research on (1) the life expectancy gap by income and (2) the relationship between this gap and Social Security retirement benefits. Finally, this report discusses the implications of this research for one type of Social Security reform proposal: raising the Social Security retirement age. First, life expectancy has increased over time for all groups. Researchers have proposed biological as well as behavioral and social factors to explain this differential in life expectancy by sex. The study finds that men in the bottom income quintile born in 1930 could expect to live an average of 26.6 additional years at age 50 (an expected age of death at 76.6), yet there has been no gain in life expectancy for men in the bottom quintile born in the 1960 cohort (life expectancy at age 50 is 26.1 years, so an expected age of death at 76.1). The NAS authors estimate that the life expectancy gap between the bottom and top income quintiles of women expanded from 3.9 years in the 1930 birth cohort to 13.6 years in the 1960 birth cohort. Social adequacy is a key goal of the Social Security program. For both the 1930 and 1960 cohorts, benefits increase with earnings. Although the Social Security benefit computation formula allows for lower earners to earn a higher replacement rate than higher earners, their dollar value of benefits received is lower because benefits increase with earnings. From Figure 6 , males born in 1930 who are in the bottom earnings quintile receive $126,000 (in 2009 dollars) in lifetime benefits, compared with $229,000 for males in the highest earnings quintile, a difference of $103,000. Males in the highest earnings quintile—who can expect to live about seven years longer than those in the 1930 cohort—can expect to receive $295,000 in benefits, almost $173,000 more than those in the lowest earnings quintile. Like males, the difference in lifetime Social Security benefits for females between the lowest and highest income quintiles is larger for the 1960 cohort than for the 1930 cohort. The authors demonstrate that Social Security is no longer progressive for later birth cohorts (i.e., 1931 and 1939) of men due to increases in mortality inequality, while Social Security remains progressive for women.
Life expectancy is a population-level measure that refers to the average number of years an individual will live. Although life expectancy has generally been increasing over time in the United States, researchers have long documented that it is lower for individuals with lower socioeconomic status (SES) compared with individuals with higher SES. Recent studies provide evidence that this gap has widened in recent decades. For example, a 2015 study by the National Academy of Sciences (NAS) found that for men born in 1930, individuals in the highest income quintile (top 20%) could expect to live 5.1 years longer at age 50 than men in the lowest income quintile. This gap has increased significantly over time. Among men born in 1960, those in the top income quintile could expect to live 12.7 years longer than men in the bottom income quintile. This NAS study finds similar patterns for women: the life expectancy gap between the bottom and top income quintiles of women expanded from 3.9 years for the 1930 birth cohort to 13.6 years for the 1960 birth cohort.
Gains in life expectancy are generally heralded as good news by lawmakers and others, signifying improved well-being in the population. Yet widening differentials in life expectancy are more troubling. Congress may be interested in recent research on this topic for many reasons, including the implications for Social Security benefits as well as Social Security reform proposals.
Social Security provides monthly benefits to retired and disabled workers and their dependents, and to dependents of deceased workers. A key goal of the Social Security program is redistribution of income from the high earner to the low earner by way of a progressive benefit formula. Widening gaps in life spans by SES pose a challenge to meeting this goal. When Social Security benefits are measured on a lifetime basis, low earners, who show little to no gains in life expectancy over time, are projected to receive increasingly lower benefits than those with high earnings. For instance, in the 2015 NAS study, men in the lowest earnings quintile saw little or no improvement in the value of their lifetime Social Security retirement benefits between the 1930 and 1960 birth cohorts (roughly $125,000 in 2009 dollars in lifetime benefits for both birth cohorts). Due to gains in life expectancy for higher earners, however, men in the highest earnings quintile born in 1930 had lifetime Social Security benefits of $229,000, and men in the highest earnings quintile born in 1960 had estimated lifetime benefits of $295,000. Thus, according to this 2015 NAS analysis, differential gains in life expectancy increased the disparity in the lifetime value of Social Security retirement benefits between the top and bottom earnings quintiles by about $70,000 (in 2009 dollars) for the later birth cohort.
In response to rising life expectancy, some commonly discussed Social Security reform proposals involve increasing the retirement age. Yet these proposals would affect low earners disproportionately (i.e., reductions in their lifetime Social Security benefits would be considerably larger than for high earners). Congress may be interested in policy proposals that mitigate the uneven effects of increasing the retirement age and protect the interests of lower-earning, shorter-lived workers.
This report provides a brief overview of the concept of life expectancy, how it is measured, and how it has changed over time in the United States. While life expectancy may be studied in a variety of contexts, this report focuses on the link between life expectancy and SES, as measured by lifetime income. In particular, this report synthesizes recent research on (1) the life expectancy gap by income and (2) the relationship between this gap and Social Security benefits. Finally, this report discusses the implications of this research for one type of Social Security reform proposal: increasing the Social Security retirement age.