The Effects of Subjective Survival on Retirement and Social Security Claiming
AbstractThis research examines the relationship between mortality risk and retirement, and mortality risk and the propensity to take early and reduced Social Security benefits. The main theory for understanding saving behavior is the life-cycle model (LCH). The LCH, however, can be extended to find the optimal retirement age, and can be used to make predictions about the desire to annuitize or equivalently, the desire to delay claiming Social Security benefits. According to the LCH, individuals who expect to be exceptionally long-lived will retire at a later age than individuals who expect to die early because they will need greater wealth to finance more years of retirement. According to almost any model of intertemporal maximization, those who expect to be long lived will see the increase in Social Security benefits that result from retiring at 65 rather than at 62 as being financially advantageous and will, therefore, delay application for benefits until the age of 65. In principle the decision to retire and the decision to take early and reduced benefits are related decisions but not necessarily the same decision. Therefore this study examines both decisions.
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Bibliographic InfoPaper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp021.
Length: 20 pages
Date of creation: May 2002
Date of revision:
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Other versions of this item:
- Michael D. Hurd & James P. Smith & Julie M. Zissimopoulos, 2004. "The effects of subjective survival on retirement and Social Security claiming," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 761-775.
- Michael D. Hurd & James P. Smith & Julie M. Zissimopoulos, 2002. "The Effects of Subjective Survival on Retirement and Social Security Claiming," NBER Working Papers 9140, National Bureau of Economic Research, Inc.
- Michael Hurd & James P. Smith & Julie M. Zissimopoulos, 2003. "The Effects of Subjective Survival on Retirements and Social Security Claiming," Working Papers 03-11, RAND Corporation Publications Department.
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
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