An empirical study of the effects of social security reforms on benefit claiming behavior and receipt using...

In the past few years, the Social Security Old-Age and Survivors Insurance benefit system in the United States has undergone some of the most significant changes since its inception. In a short period of time, we have seen the implementation of the phased increase in the full retirement age (FRA) with the resulting increase in the penalty for claiming benefits early, the elimination of the earnings test for those above the FRA, and the incremental increase in the delayed retirement credit (DRC) for those claiming benefits after the FRA. Because these changes have taken place only recently, there is relatively little research using household-level data that analyzes the consequences of all these changes. Using the public-use microdata extract from the Master Beneficiary Record, we are able to uncover a number of interesting trends in benefit claiming behavior and level of benefit receipt, which can help us understand how the changes in the system are shaping the retirement benefit claiming behavior of older Americans. We find evidence of substantial effects of the removal of the earnings test and the increase in the FRA, but evidence of very small effects as a result of the increases in the DRC.