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Probabilistic Thinking and Early Social Security Claiming

Adeline Delavande (), Michael Perry and Robert Willis ()
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Michael Perry: University of Michigan

Working Papers from University of Michigan, Michigan Retirement Research Center

Abstract: This study analyzes the extent to which an individual’s survival expectations influence his or her decision to claim social security benefits at an early age. We find that subjective survival probabilities capture meaningful behavioral responses to incentives for early Social Security claiming when they are purged of measurement error using risk factors as instruments. Among people who are still working at age 62, those who expect to live longer are likely to delay claiming of Social Security benefits to a degree that is both statistically and economically significant. For example, an increase of 5 percentage points in the subjective probability of survival to age 75 of each person leads to a 1.9 percentage point decline in the proportion who claim before age 64, from 29.6 percent to 27.7 percent.

Pages: 23 pages
Date: 2006-09
New Economics Papers: this item is included in nep-age
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