The Changing Consequences of Not Working Before Age 62

Publication Date: February 2012

Publisher: Center for Retirement Research at Boston College

Author(s): Barbara Butrica; Nadia Karamcheva

Research Area: Labor

Keywords: workers; retirement; social security; income

Type: Report

Coverage: United States


This study uses the Health and Retirement Study to deepen our understanding of the characteristics of nonworking adults ages 51 to 61 and how they support themselves before qualifying for Social Security benefits.

The results show that nonworking adults ages 51 to 61 are a heterogeneous group. A large share is poor, with low incomes and limited wealth. But a sizeable share has low incomes and abundant wealth. These individuals are income poor but asset rich. More than for singles, this phenomenon characterizes nonworking married adults. In general, we find that nonworking married adults are significantly better off than their unmarried counterparts. Many nonworking married adults have working spouses. On average, married adults without earnings have twice the per person income and more than ten times the per person assets of single adults without earnings. Additionally, married adults without earnings are 20-30 percentage points less likely to be poor than single adults without earnings.

It is important for policymakers to understand who stops working early and how they support themselves. Nonworkers may be more likely to apply and qualify for Social Security disability and SSI benefits. Also, more than any other group, nonworkers will be adversely impacted by any increases to the early entitlement age. Finally, nonworkers are especially vulnerable in retirement because they are likely to have lower savings, Social Security benefits, and pensions than workers.