October 2010, Hye Jin Rho
Recent economic turmoil has led state and local governments to seek new paths to offset budget shortfalls. Among other things, one widely discussed policy option is state employee pension reforms. These proposals seek to cut pension benefits, and, moreover, to increase the retirement age. State and local government employees generally are able to access full retirement benefits at a lower age than most other American workers, for whom the current age for eligibility for full Social Security benefits is 66 (and which will rise to 67 by 2027). Policymakers, however, must not overlook the fact that a large share of public sector workers are in physically strenuous jobs. If the retirement age were increased, many of these workers, due to the physical challenges of their jobs, would have to leave the workforce before they are eligible for full retirement benefits.
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