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Stylized Facts and Incentive Effects Related to Claiming of Retirement Benefits Based on Social Security Administration Data

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Author Info

  • Wojciech Kopczuk

    (Columbia University)

  • Jae Song

    (Social Security Administration)

Abstract

We rely on the Master Beneficiary File to document a number of facts regarding claiming of Social Security benefits and quality of date of birth data in administrative files. We then assess the impact of changes in retirement incentives that have taken place since 2000 on claiming. We find evidence of non-trivial misreporting or clerical errors in the dates of births that give rise to systematic patterns but nevertheless appear to be fairly random. We also confirm significant tendency to claim in January or on birthdays, but we find that these patterns are still sensitive to incentive effects. Relying on the discontinuity in the Early Entitlement Age that occurs for people born on the second day of any month, we find evidence that people do not have singlepeaked preferences over claiming age: relaxing the early retirement constraint leads to acceleration of retirement by some people for whom the constraint would not be otherwise binding. One possible explanation for this pattern is a preference for retiring at one's birthday. We take advantage of a change in the full retirement age and find that there remains unusually large (relative to other birthdays) number of people who claim around their 65th birthday, supporting the idea that Medicare eligibility has an impact on claiming retirement benefits. Finally, we confirm that elimination of the earnings test in 2000 for those above full retirement age accelerated retirements and find that it also led to a significant weakening of the January effect in that group, bolstering the idea that the January effect is sensitive to economic incentives.

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Bibliographic Info

Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp200.

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Length: 34 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:mrr:papers:wp200

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  1. Rogowski, Jeannette & Karoly, Lynn, 2000. "Health insurance and retirement behavior: evidence from the health and retirement survey," Journal of Health Economics, Elsevier, vol. 19(4), pages 529-539, July.
  2. Andrew A. Samwick, 1997. "Discount Rate Heterogeneity and Social Security Reform," NBER Working Papers 6219, National Bureau of Economic Research, Inc.
  3. Gruber, Jonathan & Madrian, Brigitte C, 1995. "Health-Insurance Availability and the Retirement Decision," American Economic Review, American Economic Association, vol. 85(4), pages 938-48, September.
  4. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324 Elsevier.
  5. Bridgitte C. Madrian, 1994. "The Effect of Health Insurance on Retirement," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 181-152.
  6. Courtney Coile & Jonathan Gruber, 2007. "Future Social Security Entitlements and the Retirement Decision," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 234-246, May.
  7. Mark Duggan & Perry Singleton & Jae Song, 2005. "Aching to Retire? The Rise in the Full Retirement Age and its Impact on the Disability Rolls," NBER Working Papers 11811, National Bureau of Economic Research, Inc.
  8. Gruber, Jonathan & Orszag, Peter, 2003. "Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt?," National Tax Journal, National Tax Association, vol. 56(4), pages 755-73, December.
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Cited by:
  1. Frank van Erp & Niels Vermeer & Daniel van Vuuren, 2013. "Non-financial determinants of retirement," CPB Discussion Paper 243, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Steven G. Allen & Robert L. Clark & Jennifer Maki & Melinda Sandler Morrill, 2013. "Golden Years or Financial Fears? Decision Making After Retirement Seminars," NBER Working Papers 19231, National Bureau of Economic Research, Inc.
  3. Behaghel, Luc & Blau, David M., 2010. "Framing Social Security Reform: Behavioral Responses to Changes in the Full Retirement Age," IZA Discussion Papers 5310, Institute for the Study of Labor (IZA).
  4. repec:hal:wpaper:halshs-00564950 is not listed on IDEAS
  5. Frank Erp & Niels Vermeer & Daniel Vuuren, 2014. "Non-financial Determinants of Retirement: A Literature Review," De Economist, Springer, vol. 162(2), pages 167-191, June.

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