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Early Claiming of Social Security Benefits and Labor Supply Behavior of Older Americans

  • Hugo Benitez-Silva

    ()

    (Dept. of Economics, SUNY at Stony Brook)

  • Frank Heiland

    (Florida State University Florida State University)

The labour supply incentives provided by the early retirement rules of the United States Social Security Old Age benefits program are of growing importance as the Normal Retirement Age (NRA) increases to 67 and the labour force participation of older Americans starts to increase. These incentives allow individuals who claim benefits before the NRA but continue to work, or return to the labour force, to increase their future rate of benefit pay by having benefits withheld. Since the adjustment of the benefit rate takes place only after the NRA is reached, benefits received before the NRA can become actuarially unfair for those who continue to work after claiming. Consistent with these incentives, estimates from bivariate models of the monthly labour force exit and claiming hazards using data from the Health and Retirement Study indicate that early claimers who do not withdraw from the labour force around the time they claim are increasingly likely to stay in the labour force.

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File URL: http://ms.cc.sunysb.edu/~hbenitezsilv/dec05_1.pdf
File Function: First version, 2005
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Paper provided by Stony Brook University, Department of Economics in its series Department of Economics Working Papers with number 05-05.

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Date of creation: Mar 2005
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Handle: RePEc:nys:sunysb:05-05
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