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The financial feasibility of delaying Social Security: evidence from administrative tax data

Author

Listed:
  • GODA, GOPI SHAH
  • RAMNATH, SHANTHI
  • SHOVEN, JOHN B.
  • SLAVOV, SITA NATARAJ

Abstract

Despite the large and growing returns to deferring Social Security benefits, most individuals claim Social Security before the full retirement age. In this paper, we use a panel of administrative tax data on individuals likely to financially benefit from delaying Social Security claiming to explore the relationship between Social Security claiming and distributions from tax-advantaged retirement savings accounts. We find that the majority of our sample claim Social Security prior to taking distributions from Individual Retirement Accounts (IRAs). We also find that a third of our sample have IRA balances equivalent to at least two additional years of Social Security benefits, and a quarter have IRA balances equivalent to at least 4 years of Social Security benefits. We complement our analysis with data from the Health and Retirement Study and find that these percentages are considerably higher when other financial assets are taken into account.

Suggested Citation

  • Goda, Gopi Shah & Ramnath, Shanthi & Shoven, John B. & Slavov, Sita Nataraj, 2018. "The financial feasibility of delaying Social Security: evidence from administrative tax data," Journal of Pension Economics and Finance, Cambridge University Press, vol. 17(4), pages 419-436, October.
    • Handle: RePEc:cup:jpenef:v:17:y:2018:i:04:p:419-436_00
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    Cited by:

    1. John B. Shoven & Sita Nataraj Slavov & David A. Wise, 2017. "Social Security Claiming Decisions: Survey Evidence," NBER Working Papers 23729, National Bureau of Economic Research, Inc.
    2. Raimond Maurer & Olivia S. Mitchell & Ralph Rogalla & Tatjana Schimetschek, 2021. "Optimal social security claiming behavior under lump sum incentives: Theory and evidence," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(1), pages 5-27, March.
    3. Bronshtein, Gila & Scott, Jason & Shoven, John B. & Slavov, Sita Nataraj, 2020. "Leaving big money on the table: Arbitrage opportunities in delaying social security," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 261-272.
    4. Sau‐Him Paul Lau & Qilin Zhang, 2023. "A common thread linking the design of guarantee and nonescalating payments of public annuities," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 90(3), pages 703-742, September.
    5. Duggan, Mark & Dushi, Irena & Jeong, Sookyo & Li, Gina, 2023. "The effects of changes in social security’s delayed retirement credit: Evidence from administrative data," Journal of Public Economics, Elsevier, vol. 223(C).
    6. Arild Aakvik & Tor Helge Holmås & Egil Kjerstad, 2024. "Health status, life expectancy and early claiming of pension," SN Business & Economics, Springer, vol. 4(4), pages 1-20, April.
    7. Svetlana Pashchenko & Ponpoje Porapakkarm, 2024. "Accounting For Social Security Claiming Behavior," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(1), pages 505-545, February.
    8. Mary J. Lopez & Sita Slavov, 2020. "Do immigrants delay retirement and social security claiming?," Applied Economics, Taylor & Francis Journals, vol. 52(10), pages 1105-1123, February.
    9. Arthur Seibold, 2019. "Reference Points for Retirement Behavior: Evidence from German Pension Discontinuities," CESifo Working Paper Series 7799, CESifo.
    10. Philip Armour & Angela A. Hung, 2017. "Drawing Down Retirement Wealth Interactions between Social Security Wealth and Private Retirement Savings," Working Papers WR-1165, RAND Corporation.
    11. Jason S. Scott & John B. Shoven & Sita N. Slavov & John G. Watson, 2020. "Can Low Retirement Savings Be Rationalized?," NBER Working Papers 26784, National Bureau of Economic Research, Inc.
    12. Robert L. Clark & Robert G. Hammond & Melinda S. Morrill & David Vanderweide, 2017. "Annuity Options in Public Pension Plans: The Curious Case of Social Security Leveling," NBER Working Papers 23262, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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