IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Social Security Benefits: An Empirical Study of Expectations and Realizations

Listed author(s):
  • B. Douglas Bernheim

I employ data drawn from the Retirement History Survey to study the accuracy of pre-retirement expectations concerning social security benefits. The major findings of this study are as follows. First, survey responses to questions about expected benefits are reasonably noisy. However, when one properly filters out the noise, reported forecasts appear to explain roughly 60% of the variance in realizations. Second, consumers do not form expectations on the basis of all available information. Proper adjustment of forecasts for information contained in concurrent social security entitlements could reduce the residual forecast error variance by roughly 15%. The potential gains from incorporating other information are minimal. Third, individuals do not ignore or forget information which they have used in the past, and they tend to form all expectations on the basis of the same information. Fourth, expectations are highly accurate, given the information that people do use. Extreme optimism is uncommon. Surprisingly, expectations were not abnormally inaccurate during periods of rapid legislative change. Fifth, of various population subgroups, widows and single women tend to make both the most conservative and most accurate forecasts. Married men are least conservative and least accurate. Accuracy and conservativism are not systematically related to wealth or education. Finally, individual behavior appears to conform more closely to the predictions of theory as retirement approaches.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2257.

in new window

Date of creation: May 1987
Publication status: published as Issues in Contemporary Retirement, (eds) R. Ricardo, Campbell, E. Lazaer, Hoover Institution Press: Palo Alto, 1988.
Handle: RePEc:nbr:nberwo:2257
Note: PE AG
Contact details of provider: Postal:
National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

Phone: 617-868-3900
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

in new window

  1. Gramlich, Edward M, 1983. "Models of Inflation Expectations Formation: A Comparison of Household and Economist Forecasts," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 15(2), pages 155-173, May.
  2. B. Douglas Bernheim, 1989. "The Timing of Retirement: A Comparison of Expectations and Realizations," NBER Chapters,in: The Economics of Aging, pages 335-358 National Bureau of Economic Research, Inc.
  3. B. Douglas Bernheim, 1987. "Dissaving after Retirement: Testing the Pure Life Cycle Hypothesis," NBER Chapters,in: Issues in Pension Economics, pages 237-280 National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2257. 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: ()

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.