The Supplemental Security Income Program and Incentives to Claim Social Security Retirement Early
Features of the Supplemental Security Income (SSI) program and the social security retirement system interact to create incentives for prospective participants in the aged portion of SSI to withdraw from the labor force and make an early old age insurance (OAI) claim under social security. This paper takes a first close look at this SSI–OAI interaction. We first review the incentives to take early OAI posed by SSI rules in a basic theoretical framework. The impact of SSI rules on the financial cost of delaying the initial OAI claim is quantified using the earnings profiles of actual SSI recipients from Social Security Administration records. We then examine whether patterns of first SSI claims and early OAI claims of SSI–aged participants are consistent with the incentives identified. Finally, regression tests of behavior consistent with the predictions of the theory are implemented. The evidence from these various approaches generally points to behavior that makes the SSI–OAI interaction plausible and potentially important, and that is consistent with predicted responses to the incentives for early retirement in social security created by the interactions of SSI and OAI. Throughout, the analyses are enhanced by access to Social Security Administration records that have been matched to individuals in the Surveys of Income and Program Participation.
Volume (Year): 58 (2005)
Issue (Month): 1 (March)
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