Behavioral Effects of Social Security Policies on Benefit Claiming, Retirement and Saving

The central purpose of this paper is to formulate and estimate a retirement model that also includes claiming of Social Security benefits as an outcome, and to use the model to inquire about the effects of various proposals to change the Social Security system. The forerunner to this work is a retirement model previously built to capture the spike in retirement at the Social Security early entitlement age and the wide variation in wealth holdings, even among individuals with similar lifetime earnings. We use the updated model to investigate the effects of several potential changes in the Social Security system, including changes in the early entitlement and normal retirement ages and the elimination of the payroll tax for individuals past the normal retirement age.