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The Optimal Time to File for Social Security Benefits

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  • Thad W. Mirer

    (State University of New York at Albany)

Abstract

Under current Social Security rules, a newly retired worker can affect the age structure of benefits that he or she will receive by choosing when to file for a claim for benefits: the longer the claim is deferred, the greater the monthly benefit will be. This article examines the alternatives available to individuals and presents a life cycle model of retirement planning that determines the optimal time to file for benefits. The model is applied with the Social Security rules for 1998 and with an idealized system in which all adjustments to benefits are actuarially fair. It is shown that in many cases individuals will choose to file for benefits several years after retirement instead of immediately. The gain achieved by doing this can be substantial.

Suggested Citation

  • Thad W. Mirer, 1998. "The Optimal Time to File for Social Security Benefits," Public Finance Review, , vol. 26(6), pages 611-636, November.
    • Handle: RePEc:sae:pubfin:v:26:y:1998:i:6:p:611-636
    DOI: 10.1177/109114219802600606
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    References listed on IDEAS

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    1. Mariger, Randall P, 1987. "A Life-cycle Consumption Model with Liquidity Contraints: Theory and Empirical Results," Econometrica, Econometric Society, vol. 55(3), pages 533-557, May.
    2. Feldstein, Martin, 1990. "Imperfect annuity markets, unintended bequests, and the optimal age structure of social security benefits," Journal of Public Economics, Elsevier, vol. 41(1), pages 31-43, February.
    3. Hurd, Michael D, 1989. "Mortality Risk and Bequests," Econometrica, Econometric Society, vol. 57(4), pages 779-813, July.
    4. Mirer, Thad W., 1992. "Life-cycle valuation of social security and pension wealth," Journal of Public Economics, Elsevier, vol. 48(3), pages 377-384, August.
    5. Quinn, Joseph F, 1985. "Retirement Income Rights as a Component of Wealth in the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 31(3), pages 223-236, September.
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    7. Alan S. Blinder & Roger H. Gordon & Donald E. Wise, 1980. "Reconsidering the Work Disincentive Effects of Social Security," NBER Working Papers 0562, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Coile, Courtney & Diamond, Peter & Gruber, Jonathan & Jousten, Alain, 2002. "Delays in claiming social security benefits," Journal of Public Economics, Elsevier, vol. 84(3), pages 357-385, June.
    2. Frank W. Heiland & Na Yin, 2014. "Have We Finally Achieved Actuarial Fairness of Social Security Retirement Benefits and Will It Last?," Working Papers wp307, University of Michigan, Michigan Retirement Research Center.

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