The Supplemental Security Income Program and Incentives to Claim Social Security Retirement Early: Empirical Evidence from Matched SIPP and Social Security Administrative Files

Features of the Supplemental Security Income (SSI) program and the social security retirement system interact to create incentives for prospective participants in the aged portion of SSI to withdraw from the labor force and make an early old age insurance (OAI) claim under social security. This paper takes a first close look at this SSI-OAI interaction. The work disincentives posed by SSI rules and the potential interactions between the SSI and social security programs are outlined in a basic theoretical framework. The impact of SSI rules on the financial cost of delaying the initial OAI claim is calculated using earnings records of actual SSI recipients. Regression specifications for early OAI claims that include variables intended to capture the influence of SSI are estimated. Throughout, the analyses are enhanced by access to Social Security Administration records that have been matched to individuals in the Surveys of Income and Program Participation. Authors’ Acknowledgements The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) to the Michigan Retirement Research Center (MRRC). Preliminary research was supported by an SSA grant to the Center for Retirement Research at Boston College (CRR). The opinions and conclusions are solely those of the authors and should not be construed as representing the opinions or policy of SSA or any agency of the Federal Government, the MRRC, or the CRR. Sarah Jackson provided excellent assistance with programming social security calculations. We are grateful to Howard Iams and Minh Huynh of the Social Security Administration for help accessing and interpreting administrative records. We thank Richard Burkhauser for very helpful comments on earlier work.