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Older Peoples’ Willingness to Delay Social Security Claiming

In: Incentives and Limitations of Employment Policies on Retirement Transitions: Comparisons of Public and Private Sectors

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  • Raimond Maurer
  • Olivia S. Mitchell

Abstract

We designed and fielded an experimental module in the 2014 HRS which seeks to measure older persons' willingness to voluntarily defer claiming of Social Security benefits. In addition we evaluate the stated willingness of older individuals to work longer, depending on the Social Security incentives offered to delay claiming their benefits. Our project extends previous work by analyzing the results from our HRS module and comparing findings from other data sources, which included very much smaller samples of older persons. We show that half of the respondents would delay claiming if no work requirement were in place under the status quo, and only slightly fewer, 46 percent, with a work requirement. We also asked respondents how large a lump sum they would need with or without a work requirement. In the former case, the average amount needed to induce delayed claiming was about $60,400, while when part-time work was required, the average was $66,700. This implies a low utility value of leisure foregone of only $6,300, or about 10 percent of older households' income.
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Suggested Citation

  • Raimond Maurer & Olivia S. Mitchell, 2019. "Older Peoples’ Willingness to Delay Social Security Claiming," NBER Chapters, in: Incentives and Limitations of Employment Policies on Retirement Transitions: Comparisons of Public and Private Sectors, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14322
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    References listed on IDEAS

    as
    1. Gustman, Alan L. & Steinmeier, Thomas L., 2015. "Effects of social security policies on benefit claiming, retirement and saving," Journal of Public Economics, Elsevier, vol. 129(C), pages 51-62.
    2. Horneff, Vanya & Maurer, Raimond & Mitchell, Olivia S. & Rogalla, Ralph, 2015. "Optimal life cycle portfolio choice with variable annuities offering liquidity and investment downside protection," Insurance: Mathematics and Economics, Elsevier, vol. 63(C), pages 91-107.
    3. Jeffrey R. Brown & Arie Kapteyn & Olivia S. Mitchell, 2016. "Framing And Claiming: How Information-Framing Affects Expected Social Security Claiming Behavior," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 83(1), pages 139-162, January.
    4. Jingjing Chai & Raimond Maurer & Olivia S. Mitchell & Ralph Rogalla, 2012. "Exchanging Delayed Social Security Benefits for Lump Sums: Could This Incentivize Longer Work Careers?," Working Papers wp266, University of Michigan, Michigan Retirement Research Center.
    5. Coile, Courtney & Diamond, Peter & Gruber, Jonathan & Jousten, Alain, 2002. "Delays in claiming social security benefits," Journal of Public Economics, Elsevier, vol. 84(3), pages 357-385, June.
    6. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    7. John B. Shoven & Sita Nataraj Slavov, 2012. "The Decision to Delay Social Security Benefits: Theory and Evidence," NBER Working Papers 17866, National Bureau of Economic Research, Inc.
    8. Shoven, John B. & Slavov, Sita Nataraj, 2014. "Does it pay to delay social security?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 13(2), pages 121-144, April.
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    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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