For all workers, increasing the full retirement age, which currently is 67, will result in a cut in benefits. This is especially true for seniors who take early retirement at age 62. For these seniors, the Social Security benefit is currently reduced by 30 percent. But increasing that person’s full retirement age to 70, as some advocate, would result in a reduction in the benefit at age 62 of close to half, depending upon the final language of any eventual legislation.
Some of us have the means to retire on reduced Social Security benefits at age 62. But what about those who don’t want to retire that soon, but are forced to do so? Those who advocate for a higher retirement age agree that some workers won’t be able to stay in the labor force until they are 70. They concede that workers who have physically-demanding jobs, or whose health worsens, might not be able to work until age 70. Their remedy? File for Social Security disability benefits. This sounds like a workable solution, but is it? Let’s consider how the disability program works today.
The Disability Program’s definition of disability is very stringent. In fact, it is one of the most restrictive definitions of disability among all of the government’s disability programs. It’s possible, for example, to qualify for disability benefits from the Department of Veterans Affairs or from Civil Service and still not qualify for Social Security disability.
Why is this? It’s all in the program’s definition of disability. To qualify for Social Security disability, a worker must be unable to perform any substantial work due to the worker’s medical condition. Not only must the disabling condition be severe, it must be long-lasting. The disability must be expected to last at least one year or to result in death. Those with short-term disabilities cannot qualify.
Benefits cannot be paid for a partial disability. Under Social Security, a worker is either 100 percent disabled or is denied benefits. Only those with the most severe disabilities can qualify. That leaves out many people in their early to mid-60’s who have health problems that limit their ability to work without leaving them totally disabled.
The disability application process can be cumbersome. Most people who apply for disability benefits are denied by the state agencies, or Disability Determination Services (DDS), that make initial disability decisions. According to current Social Security data, these agencies make favorable decisions in little more than one-third of the cases they adjudicate. For the two-thirds who are denied, they must appeal the DDS’s decision.
The appeals process is complex and lengthy. There are four possible levels of appeal after a disability claim is denied—– 1) reconsideration by another reviewer at the state agency, DDS, that made the first decision, then, 2) a hearing before a Social Security administrative law judge, then 3) an appeals council review, then, the final possible step, 4) review in a federal court. Just half of these appeal steps would take well over a year to accomplish. Running through all four stages would amount to a multiple year effort.
The point is, qualifying for disability is not easy and it is not quick. The standard for disability benefits is very strict. Individuals with less severe impairments or impairments that are not easily documented are denied by the DDSs in two out of three cases. Denial rates are even higher for certain impairments that affect older workers, such as injuries to the back, the joints or muscular ligaments.
Since qualifying for disability is so difficult, where would increasing the retirement age leave older workers? They would remain in the workforce if possible. But what if these workers lose their jobs? Finding new employment is challenging for older workers in the best of times. It is even more difficult during economic downturns. The alternative simply would be for an individual to accept a massive reduction in Social Security benefits. That’s bad for older workers and it’s bad for America.
Although some economists and others have proposed raising Social Security’s retirement age, such a dramatic change should not be made without considering what it will mean for millions of America’s workers. It will mean especially deep cuts for those who can afford them least – lower income workers and those whose physically-demanding occupations make it impossible for them to continue to work to age 70. It’s easy to try to sidestep these problems by suggesting that affected workers can just apply for disability. But as we have described here, that suggestion is much easier said than done.
Government Relations and Policy, March 2022