Family status, social security claiming options, and life cycle portfolios

Andreas Hubener, Raimond Maurer and Olivia Mitchell

No 26, SAFE Policy Letters from Leibniz Institute for Financial Research SAFE

Abstract: Social Security rules that determine retirement, spousal, and survivor benefits, along with benefit adjustments according to the age at which these are claimed, open up a complex set of financial options for household decisions. These rules influence optimal household asset allocation, insurance, and work decisions, subject to life cycle demographic shocks, such as marriage, divorce, and children. Our model-based research generates a wealth profile and a low and stable equity fraction consistent with empirical evidence. We confirm predictions that wives will claim retirement benefits earlier than husbands, while life insurance is mainly purchased by younger men. Our policy simulations imply that eliminating survivor benefits would sharply reduce claiming differences by sex while dramatically increasing men's life insurance purchases.

Keywords: life-cycle models; household savings; investment decisions; life-cycle models; household savings; investment decisions (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-age and nep-ias
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safepl:26

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