Delays in Claiming Social Security Benefits

53 Pages Posted: 9 Mar 2000 Last revised: 13 Oct 2010

See all articles by Courtney Coile

Courtney Coile

Wellesley College; National Bureau of Economic Research (NBER)

Peter A. Diamond

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Alain Jousten

University of Liege; IZA Institute of Labor Economics; Netspar; International Monetary Fund (IMF)

Date Written: August 1999

Abstract

This paper focuses on Social Security benefit claiming behavior, a take-up decision that has been ignored in the previous literature. Using financial calculations and simulations based on an expected utility maximization model, we show that delaying benefit claim for a period of time after retirement is optimal in a wide variety of cases and that gains from delay may be significant. We find that approximately 10% of men retiring before their 62nd birthday delay claiming for at least one year after eligibility. We estimate hazard and probit models using data from the New Beneficiary Data System to test four cross-sectional predictions. While the data suggest that too few men delay, we find that the pattern of delays by early retirees is generally consistent with the hypotheses generated by our theoretical model.

Suggested Citation

Coile, Courtney and Diamond, Peter A. and Gruber, Jonathan and Jousten, Alain, Delays in Claiming Social Security Benefits (August 1999). NBER Working Paper No. w7318. Available at SSRN: https://ssrn.com/abstract=197148

Courtney Coile (Contact Author)

Wellesley College ( email )

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Peter A. Diamond

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Alain Jousten

University of Liege ( email )

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IZA Institute of Labor Economics

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International Monetary Fund (IMF)

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