Working Paper: NBER ID: w30843
Authors: Sita Slavov
Abstract: Twenty years ago, the adjustment to monthly Social Security benefits for early or delayed claiming was, on average, roughly actuarially fair, although some subsets of individuals could gain from delay. Since then, delaying claiming has become much more attractive thanks to three factors: a more generous delayed retirement credit, improvements in mortality, and historically low real interest rates. In this article, I examine how these three factors influence optimal claiming behavior. I also discuss empirical patterns of claiming across individuals and over time, as well as explanations for these patterns. I argue that although many people appear to claim suboptimally early, this behavior may be changing as information spreads about the importance of the claiming decision. Finally, I discuss policy towards claiming and the impact that an increase in strategic claiming could have on Social Security’s finances.
Keywords: No keywords provided
JEL Codes: G59; H55; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| More generous delayed retirement credits (J26) | Increase in attractiveness of delaying social security benefits (J26) |
| Improvements in mortality (I14) | Increase in attractiveness of delaying social security benefits (J26) |
| Historically low real interest rates (E43) | Increase in attractiveness of delaying social security benefits (J26) |
| More generous delayed retirement credits (J26) | Decision to delay claiming benefits (J26) |
| Improvements in mortality (I14) | Decision to delay claiming benefits (J26) |
| Historically low real interest rates (E43) | Decision to delay claiming benefits (J26) |