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.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
7318.
Length: Date of creation: Aug 1999 Date of revision: Handle: RePEc:nbr:nberwo:7318
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COILE, Courtney & DIAMOND, Peter & GRUBER, Jonathan & JOUSTEN, Alain, 2000.
"Delays in claiming social security benefits,"
CORE Discussion Papers
2000029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Find related papers by JEL classification: H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents H5 - Public Economics - - National Government Expenditures and Related Policies
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Michael D. Hurd & John B. Shoven, 1985.
"The Distributional Impact of Social Security,"
NBER Chapters,
in: Pensions, Labor, and Individual Choice, pages 193-222
National Bureau of Economic Research, Inc.
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