Accounting for Social Security Claiming Behavior

CRR WP No. 2018-8

58 Pages Posted: 5 Oct 2018 Last revised: 30 May 2023

See all articles by Svetlana Pashchenko

Svetlana Pashchenko

University of Georgia

Ponpoje Porapakkarm

National Graduate Institute for Policy Studies (GRIPS, Tokyo)

Date Written: May 22, 2023

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 lifecycle 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

JEL Classification: D91, G11, G22

Suggested Citation

Pashchenko, Svetlana and Porapakkarm, Ponpoje, Accounting for Social Security Claiming Behavior (May 22, 2023). CRR WP No. 2018-8, Available at SSRN: https://ssrn.com/abstract=3248522 or http://dx.doi.org/10.2139/ssrn.3248522

Svetlana Pashchenko

University of Georgia ( email )

Athens, GA 30602-6254
United States

Ponpoje Porapakkarm (Contact Author)

National Graduate Institute for Policy Studies (GRIPS, Tokyo) ( email )

7-22-1 Roppongi, Minato-Ku
Tokyo 106-8677, Tokyo 106-8677
Japan
+818095248741 (Phone)

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