Volume 13 Issue 1 - October 2012
Key Findings: 2012 MRRC Papers
Behavioral Effects of Social Security Policies on Benefit Claiming, Retirement and Saving
by Alan L. Gustman and Thomas L. Steinmeier
- A retirement model that also includes claiming of Social Security benefits as an outcome is used to inquire about the effects of various proposals to change the Social Security system.
- Increasing the early entitlement age to 64 increases full-time employment at ages 62 and 63 by approximately 12 percentage points. Essentially, the spike in retirement from full-time work, which presently occurs at age 62, would be shifted to age 64 by this change.
- Increasing the normal retirement age to 67 for those who had an age 65 normal retirement age increases full time work by substantially less than the increases caused by raising the early entitlement age.
- Eliminating the payroll tax after the normal retirement age reduces full-time work by between 0.5 and 1 percent between age 60 and age 64 and increases full-time work by between 1 and 2 percent at age 65 and thereafter.