Accounting for Social Security Claiming Behavior

Svetlana Pashchenko and Ponpoje Porapakkarm

No 2019-068, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: Social Security benefit claiming is highly concentrated at two ages, 62 and the full retirement age, which is hard to explain by the program’s incentives. We study claiming and labor supply decisions in a structural framework and provide three main findings. First, we show that claiming behavior can be well explained by a parsimonious life-cycle model with fully rational agents. The two key mechanisms are (i) the strong unwillingness to hold annuities, (ii) the effects of the earnings test. Second, we show that current rules distort claiming and labor supply decisions, and eliminating these distortions results in large welfare gains. Finally, we show that claiming decisions can be used to sharpen the identification of important preference parameters.

Keywords: social security; retirement; annuities; consumption and saving; life-cycle model (search for similar items in EconPapers)
JEL-codes: D91 G11 G22 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-age
Note: M
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Pashch ... ecurity-claiming.pdf First version, November 15, 2019 (application/pdf)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Pashch ... rity-claiming_r1.pdf Second version, September 24, 2022 (application/pdf)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Pashch ... rity-claiming_r2.pdf Third version, July 4, 2023 (application/pdf)

Related works:
Journal Article: ACCOUNTING FOR SOCIAL SECURITY CLAIMING BEHAVIOR (2024)
Working Paper: Accounting for Social Security claiming behavior (2023)
Working Paper: Accounting for Social Security claiming behavior (2019)
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