A model of social security and retirement decisions
The purpose of the present paper is to focus on the potential inducement to retire earlier in the presence of social security and on the implied effects on lifetime savings. This problem is analyzed within the framework of a model of intertemporal utility maximization. The organization of this work is as follows. Section 1 introduces the topic. Section 2 presents the model of individual optimization and of the market equilibrium. Sections 3 through 5 present the comparative statistics analysis. Section 3 evaluates the effects on the equilibrium retirement age, section 4 modifies the benefits formula to depend on retirement age and section 5 examines the wealth-income ratio effect. Section 6 introduces the intergenerational transfer problem. Section 7 presents the general model underlying the previous sections.
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- Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
- Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March.
- Michael J. Boskin, 1975. "Social Security and Retirement Decisions," NBER Working Papers 0107, National Bureau of Economic Research, Inc.
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