TY  - JOUR
AU  - Shoven,John B.
AU  - Slavov,Sita Nataraj
TI  - The Decision to Delay Social Security Benefits: Theory and Evidence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17866
PY  - 2012
Y2  - February 2012
UR  - http://www.nber.org/papers/w17866
L1  - http://www.nber.org/papers/w17866.pdf
N1  - Author contact info:
John B. Shoven
Department of Economics
579 Serra Mall at Galvez Street
Stanford, CA 94305-6015
Tel: 650/723-3273
Fax: 650/723-8611
E-Mail: shoven@stanford.edu

Sita Slavov
American Enterprise Institute
1150 17th Street, NW
Washington, DC 20036
Tel: 202/862-7161
E-Mail: sita.slavov@aei.org
M2  - featured in NBER digest on 2012-07-01
AB  - Social Security benefits may be commenced at any time between age 62 and age 70.  As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit amount to reflect the age at which benefits are claimed. We investigate the actuarial fairness of this adjustment. Our simulations suggest that delaying is actuarially advantageous for a large subset of people, particularly for real interest rates of 3.5 percent or below.  The gains from delaying are greater at lower interest rates, for married couples relative to singles, for single women relative to single men, and for two-earner couples relative to one-earner couples.  In a two-earner couple, the gains from deferring the primary earner’s benefit are greater than the gains from deferring the secondary earner’s benefit.  We then use panel data from the Health and Retirement Study to investigate whether individuals’ actual claiming behavior appears to be influenced by the degree of actuarial advantage to delaying.  We find no evidence of a consistent relationship between claiming behavior and factors that influence the actuarial advantage of delay, including gender and marital status, interest rates, subjective discount rates, or subjective assessments of life expectancy.
ER  -