The Impact of Spousal Social Security Claiming Decisions on the Financial Shock of Widowhood

This paper presents evidence suggesting that delayed Social Security claiming by husbands – resulting in an actuarially enhanced benefit – attenuates the financial shock of widowhood for their wives. Under Social Security survivor benefit rules, primary earners (usually husbands) pass on the actuarial adjustments from delayed claiming to their surviving spouses. Using a staggered difference-in-differences approach, I find women whose husbands delayed claiming to full retirement age or later face a post-widowhood increase of 6.9 percentage points in the probability of falling below the 5th percentile of the pre-widowhood income distribution. This effect is almost 12 percent smaller for each year of delayed claiming by the husband (though the attenuation is concentrated in the first 4 years of widowhood). The general findings are robust to instrumenting for the husband’s claiming age using the loosening of the retirement earnings test in 2000 – a policy change that incentivized earlier claiming.