Working Paper: NBER ID: w9140
Authors: Michael D. Hurd; James P. Smith; Julie M. Zissimopoulos
Abstract: According to the life-cycle model, mortality risk will influence both retirement and the desire to annuitize wealth. We estimate the effect of subjective survival probabilities on retirement and on the claiming of Social Security benefits because delayed claiming is equivalent to the purchase of additional Social Security annuities. We find that those with very low subjective probabilities of survival retire earlier and claim earlier than those with higher subjective probabilities, but the effects are not large. The great majority of workers claim as soon as they are eligible.
Keywords: retirement; social security; subjective survival; lifecycle model
JEL Codes: J26; D91; I10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low subjective probabilities of survival (D80) | earlier retirement (J26) |
| low subjective probabilities of survival (D80) | earlier claiming of social security benefits (H55) |
| high subjective probabilities of survival (D80) | delayed claiming of social security benefits (H55) |
| subjective survival probabilities (C41) | retirement decisions (J26) |
| subjective survival probabilities (C41) | claiming decisions (D91) |
| subjective survival probabilities + economic variables + health status (C41) | retirement decisions (J26) |
| subjective survival probabilities (C41) | labor force participation and social security liabilities (J32) |