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How Social Security Reform Affects Retirement and Pension Claiming

Author

Listed:
  • Rafael Lalive
  • Arvind Magesan
  • Stefan Staubli

Abstract

A reform increasing the full retirement age (FRA) by one year leads to larger than expected delays in pension claiming and retirement, while making late claiming more lucrative leads to a smaller than expected delay in pension claiming. Survey evidence shows people view the FRA as the "normal" retirement age and prefer to couple pension claiming and retirement decisions together, even though these two decisions are not coupled through social security provisions. Two mechanisms are at work: reference dependence with loss aversion in pension claiming, and spillovers from pension claiming on retirement choices. The FRA increase leads to large government savings.

Suggested Citation

  • Rafael Lalive & Arvind Magesan & Stefan Staubli, 2023. "How Social Security Reform Affects Retirement and Pension Claiming," American Economic Journal: Economic Policy, American Economic Association, vol. 15(3), pages 115-150, August.
    • Handle: RePEc:aea:aejpol:v:15:y:2023:i:3:p:115-50
    DOI: 10.1257/pol.20200686
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    Citations

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    Cited by:

    1. Adam Lavecchia & James Stutely, 2025. "Earnings Responses to Social Security Contributions: Evidence from Older Workers in Canada," CESifo Working Paper Series 12112, CESifo.
    2. Glenzer, Franca & Michaud, Pierre-Carl & Staubli, Stefan, 2025. "Frames, incentives, and education: Effectiveness of interventions to delay public pension claiming," Journal of Public Economics, Elsevier, vol. 248(C).
    3. Andrew E Clark & Rong Zhu, 2024. "Taking Back Control? Quasi-Experimental Evidence on the Impact of Retirement on Locus of Control," The Economic Journal, Royal Economic Society, vol. 134(660), pages 1465-1493.
    4. Sona Badalyan, 2025. "Peer Effects in Old-Age Employment Among Women," CERGE-EI Working Papers wp800, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    5. Liisa-Maria Palomäki & Jyri Liukko & Aart-Jan Riekhoff & Sanna Tenhunen, 2025. "Retirement timing and changes in quality of life: a retrospective analysis of transition from employment to old-age retirement in Finland," European Journal of Ageing, Springer, vol. 22(1), pages 1-11, December.
    6. Sona Badalyan, 2025. "Retirement Age Reforms and Worker Substitutability: Implications for Employment of Older Workers," CERGE-EI Working Papers wp794, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    7. Guiling Zhao & Deyu Zhou & Yunpeng Fu, 2024. "Study on the Impact of Delayed Retirement on the Sustainability of the Basic Pension Insurance Fund for Urban Employees in China," Sustainability, MDPI, vol. 16(10), pages 1-20, May.
    8. Lavecchia, Adam M. & Stutely, James, 2025. "Earnings Responses to Social Security Contributions: Evidence from Older Workers in Canada," IZA Discussion Papers 18106, Institute of Labor Economics (IZA).
    9. Sauré, Philip & Seibold, Arthur & Smorodenkova, Elizaveta & Zoabi, Hosny, 2025. "Occupations and retirement across countries," The Journal of the Economics of Ageing, Elsevier, vol. 31(C).
    10. repec:osf:socarx:n3t2s_v2 is not listed on IDEAS
    11. Khanna, Gaurav & Lay, Margaret J. & Lee, Stephanie & Thompson, Benjamin, 2025. "Female labor supply and rural pension eligibility in Brazil," Journal of Public Economics, Elsevier, vol. 245(C).
    12. Emre Oral & Simon Rabaté & Arthur Seibold, 2024. "The Social Multiplier of Pension Reform," CESifo Working Paper Series 10999, CESifo.
    13. Fabian Kindermann & Veronika Püschel, 2021. "Progressive Pensions as an Incentive for Labor Force Participation," Working Papers 2021-038, Human Capital and Economic Opportunity Working Group.
    14. Jamie Hentall-MacCuish, 2024. "Costly attention and retirement," IFS Working Papers W24/59, Institute for Fiscal Studies.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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