IDEAS home Printed from https://ideas.repec.org/p/mrr/papers/wp021.html
   My bibliography  Save this paper

The Effects of Subjective Survival on Retirement and Social Security Claiming

Author

Listed:
  • Michael D. Hurd

    (RAND)

  • James P. Smith

    (RAND)

  • Julie M. Zissimopoulos

    (RAND)

Abstract

This research examines the relationship between mortality risk and retirement, and mortality risk and the propensity to take early and reduced Social Security benefits. The main theory for understanding saving behavior is the life-cycle model (LCH). The LCH, however, can be extended to find the optimal retirement age, and can be used to make predictions about the desire to annuitize or equivalently, the desire to delay claiming Social Security benefits. According to the LCH, individuals who expect to be exceptionally long-lived will retire at a later age than individuals who expect to die early because they will need greater wealth to finance more years of retirement. According to almost any model of intertemporal maximization, those who expect to be long lived will see the increase in Social Security benefits that result from retiring at 65 rather than at 62 as being financially advantageous and will, therefore, delay application for benefits until the age of 65. In principle the decision to retire and the decision to take early and reduced benefits are related decisions but not necessarily the same decision. Therefore this study examines both decisions.

Suggested Citation

  • Michael D. Hurd & James P. Smith & Julie M. Zissimopoulos, 2002. "The Effects of Subjective Survival on Retirement and Social Security Claiming," Working Papers wp021, University of Michigan, Michigan Retirement Research Center.
  • Handle: RePEc:mrr:papers:wp021
    as

    Download full text from publisher

    File URL: http://www.mrrc.isr.umich.edu/publications/Papers/pdf/wp021.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jeffrey R. Brown & Mark J. Warshawsky, 2001. "Longevity-Insured Retirement Distributions from Pension Plans: Market and Regulatory Issues," NBER Working Papers 8064, National Bureau of Economic Research, Inc.
    2. Kotlikoff, Laurence J & Spivak, Avia, 1981. "The Family as an Incomplete Annuities Market," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 372-391, April.
    3. 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.
    4. F. Thomas Juster & Richard Suzman, 1995. " An Overview of the Health and Retirement Study," Journal of Human Resources, University of Wisconsin Press, vol. 30, pages s7-s56.
    5. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002 9, Royal Economic Society.
    6. Michael D. Hurd & Kathleen McGarry, 2002. "The Predictive Validity of Subjective Probabilities of Survival," Economic Journal, Royal Economic Society, vol. 112(482), pages 966-985, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mrr:papers:wp021. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (MRRC Administrator) or (Cindy George). General contact details of provider: http://edirc.repec.org/data/isumius.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.