How Family Status and Social Security Claiming Options Shape Optimal Life Cycle Portfolios

Andreas Hubener, Raimond Maurer and Olivia Mitchell

The Review of Financial Studies, 2016, vol. 29, issue 4, 937-978

Abstract: We show how optimal household decisions regarding work, retirement, saving, portfolio allocations, and life insurance are shaped by the complex financial options embedded in U.S. Social Security rules and uncertain family transitions. Our life cycle model predicts sharp consumption drops on retirement, an age-62 peak in claiming rates, and earlier claiming by wives versus husbands and single women. Moreover, life insurance is mainly purchased on men's lives. Our model, which takes Social Security rules seriously, generates wealth and retirement outcomes that are more consistent with the data, in contrast to earlier and less realistic models. Received March 23, 2015; accepted September 30, 2015 by Editor Andrew Karolyi.

Date: 2016
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Working Paper: How Family Status and Social Security Claiming Options Shape Optimal Life Cycle Portfolios (2013)
Working Paper: How Family Status and Social Security Claiming Options Shape Optimal Life Cycle Portfolios (2013)
Working Paper: How family status and social security claiming options shape optimal life cycle portfolios (2013)
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