Retirement responses to social security changes.

Abstract

Workers often retire at an age later than the age at which they accept Social Security benefits. This study employed a life-cycle model of individual utility to examine the effects of Social Security provisions on the timing of benefit acceptance and retirement. The behavioral responses of older workers are estimated with a two-equation logit model using data from the Retirement History Study. The results indicate that the legislated increase in the age of eligibility for full Social Security benefits beginning in the 21st century will have relatively small effects on the ages of retirement and benefit acceptance. The mandated decrease in the earnings test tax also is predicted to have only a small effect on the behavior of older persons.