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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. Andrew E Clark & Rong Zhu, 2023. "Taking Back Control? Quasi-Experimental Evidence on the Impact of Retirement on Locus of Control," Working Papers halshs-04335808, HAL.

    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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