New Evidence on Earnings and Benefit Claims Following Changes in the Retirement Earnings Test in 2000

Text description for Chart 4.
Distribution of old-age beneficiaries with earnings in $1,000 intervals relative to the earnings test threshold for treatment and control groups, before and after removal

This bar graph consists of four panels. Two panels are labeled younger groups, one of these shows data for 1996–1999 and the other shows data for 2000–2003. The other two panels are labeled older groups, likewise with one panel for 1996–1999 and the other for 2000–2003.

The vertical axis in all four panels is percent; in the younger groups panels it ranges from zero to 4.0 in increments of 0.5, and in the older groups panels ranges from zero to 1.2 in increments of 0.2

In all panels, the horizontal axes represent $1,000 earnings intervals relative to the earnings test threshold; five intervals below the threshold and four intervals above the threshold are shown. Because thresholds vary from year to year, horizontal axes are not labeled with specific values.

The panels for the younger groups show data separately for individuals turning ages 62–64 and those turning age 65 during the period of coverage.

For those turning ages 62–64 in 1996–1999, the percentage in each earnings interval increases gradually from about 2.0 percent to about 2.5 percent between the fifth and the second interval under the threshold, then spikes at about 3.8 percent in the first interval under the threshold. In each successive interval above the threshold, the percentages decline steadily from about 2.1 percent to about 0.9 percent. The threshold values for this group are $8,280, $8,640, $9,120, and $9,600.

For those turning ages 62–64 in 2000–2003, the percentage in each earnings interval increases gradually from about 1.9 percent to about 2.2 percent between the fifth and the second interval under the threshold, then spikes at about 3.1 percent in the first interval under the threshold. In each successive interval above the threshold, the percentages decline steadily from about 1.8 percent to about 0.9 percent. The threshold values for this group are $10,080, $10,680, $11,280, and $11,520.

For those turning age 65 in 1996–1999, the percentage in each earnings interval fluctuates, from about 1.5 percent in the fifth interval under the threshold to about 1.9 percent in the first interval under the threshold. In each successive interval above the threshold, the percentages decline slightly from about 1.5 percent to about 1.3 percent. The threshold values for this group are $8,280, $8,640, $9,120, and $9,600.

For those turning age 65 in 2000 2003, the percentage in each earnings interval decreases slightly throughout all nine intervals, ranging from about 0.8 percent in the lowest earnings interval to about 0.4 percent in the highest earning interval. The threshold values for this group are $17,000, $25,000, $30,000, and $30,720.

The panels for the older groups show data separately for individuals who have attained ages 65–69 and those who have attained ages 70–72 during the period of coverage.

For those who have attained ages 65–69 in 1996–1999, the percentage in each earnings interval fluctuates slightly, from a minimum of just below 1.0 percent in the second interval under the threshold to a maximum of about 1.1 percent in the first interval under the threshold. In each successive interval above the threshold, the percentages decline steadily from about 0.6 percent to about 0.3 percent. The threshold values for this group are $12,500, $13,500, $14,500, and $15,500.

For those who have attained ages 65–69 in 2000–2003, the percentage in each earnings interval gradually declines across eight of the nine intervals, ranging from about 0.8 percent in the lowest earnings interval to about 0.4 percent in the highest earning interval. The threshold values for this group are $16,500, $17,500, $18,500, and $19,500.

For those who have attained ages 70–72 in 1996–1999, the percentage in each earnings interval gradually declines across eight of the nine intervals, ranging from just below 0.6 percent in the lowest two earnings intervals to just above 0.2 percent in the highest earning interval. The threshold values for this group are $12,500, $13,500, $14,500, and $15,500.

For those who have attained ages 70–72 in 2000–2003, the percentage in each earnings interval decreases slightly throughout all nine intervals, ranging from about 0.5 percent in the lowest earnings interval to about 0.2 percent in the highest earning interval. The threshold values for this group are $16,500, $17,500, $18,500, and $19,500.

To summarize, the percentages of individuals in each earning interval generally decline from the lowest earning interval to the highest earning interval. The notable exceptions are those turning ages 62–64 in 1996–1999, and to a lesser extent those turning ages 62–64 in 2000–2003; for these groups, the percentage in each earnings interval increases gradually between the fifth and the second interval under the threshold, spikes at the first interval under the threshold, then declines steadily in each successive interval above the threshold.