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A Model of Social Security and Retirement Decisions

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  • Eytan Sheshinski

Abstract

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.

Suggested Citation

  • Eytan Sheshinski, 1977. "A Model of Social Security and Retirement Decisions," NBER Working Papers 0187, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0187
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    References listed on IDEAS

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    1. Michael J. Boskin, 1975. "Social Security and Retirement Decisions," NBER Working Papers 0107, National Bureau of Economic Research, Inc.
    2. Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March.
    3. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
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