Differences in life expectancy by income and educational attainment have been growing in the United States in recent decades. The close relationship between socioeconomic status and mortality—the flip side of longevity—has been long observed and is well documented. But in recent decades, socioeconomic status has become an even more important indicator of life expectancy, largely as a result of differing rates of mortality from heart disease and cancers.

Social Security provides an annuity that protects against unexpectedly long lives, but that feature likely benefits higher socioeconomic groups over less advantaged groups. Widening gaps in life expectancy across socioeconomic groups going forward have implications for analyses of various options to change the Social Security program. Longer-lived beneficiaries, disproportionately of higher socioeconomic status, receive benefits for a longer period. A continued widening of the gap would reduce progressivity and worsen the long-term shortfall in financing.

This paper will explore implications of more differential mortality going forward for various policy options commonly suggested to close the financing shortfall in the Social Security program. CBO’s long-term model, based on administrative earnings data, is a highly sophisticated tool for this purpose. To measure distributional effects of the different policy options, we will use the ratio of median lifetime benefits net of income taxes on benefits to median lifetime payroll taxes within each quintile of household lifetime earnings. We will examine how raising the full retirement age to 69 affects the ratio of median lifetime benefits to median lifetime payroll taxes given current assumptions about differential mortality and under the assumption of more differential mortality in the future. Those results can be contrasted to effects of raising both the early eligibility age to 64 and raising the full retirement age to 69. We will also examine outcomes under a proportional benefit cut for all beneficiaries relative to those under a benefit cut for high lifetime earners that is of similar size in aggregate. Effects on Social Security’s financing shortfall will also be noted.