How Social Security reform affects retirement and pension claiming by Rafael Lalive, Arvind Magesan and Stefan Staubli
By: Lalive, Rafael
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Contributor(s): Magesan, Arvind | Staubli, Stefan.
Material type: 
ArticleSubject(s): SEGURIDAD SOCIAL | PENSIONES DE JUBILACIÓN | EDAD DE JUBILACION | MODELOS ECONOMETRICOS
In:
American Economic Journal : Economic Policy v. 15, n. 3, August 2023, p. 115-150Summary: A reform increasing the full retirement age (FRA) by one year leads to larger than expected delays in pension claiming and retirement, while making late claiming more lucrative leads to a smaller than expected delay in pension claiming. Survey evidence shows people view the FRA as the "normal" retirement age and prefer to couple pension claiming and retirement decisions together, even though these two decisions are not coupled through social security provisions. Two mechanisms are at work: reference dependence with loss aversion in pension claiming, and spillovers from pension claiming on retirement choices. The FRA increase leads to large government savings.
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| OP 2135/2023/3-1 Sin taxes and self-control | OP 2135/2023/3-2 Common practice | OP 2135/2023/3-3 Spending responses to high-frequency shifts in payment timing | OP 2135/2023/3-4 How Social Security reform affects retirement and pension claiming | OP 2135/2023/3-5 Corporate tax breaks and executive compensation | OP 2135/2023/4 American Economic Journal : Economic Policy | OP 2135/2023/4-1 Public pension reforms and retirement decisions |
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A reform increasing the full retirement age (FRA) by one year leads to larger than expected delays in pension claiming and retirement, while making late claiming more lucrative leads to a smaller than expected delay in pension claiming. Survey evidence shows people view the FRA as the "normal" retirement age and prefer to couple pension claiming and retirement decisions together, even though these two decisions are not coupled through social security provisions. Two mechanisms are at work: reference dependence with loss aversion in pension claiming, and spillovers from pension claiming on retirement choices. The FRA increase leads to large government savings.
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