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The Effect of Changes in Social Security's Delayed Retirement Credit: Evidence from Administrative Data

Author

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  • Mark Duggan
  • Irena Dushi
  • Sookyo Jeong
  • Gina Li
Abstract
The delayed retirement credit (DRC) increases monthly OASI (Old Age and Survivors Insurance) benefits for primary beneficiaries who claim after their full retirement age (FRA). For many years, the DRC was set at 3.0 percent per year (0.25 percent monthly). The 1983 amendments to Social Security more than doubled this actuarial adjustment to 8.0 percent per year. These changes were phased in gradually, so that those born in 1924 or earlier retained a 3.0 percent DRC while those born in 1943 or later had an 8.0 percent DRC. In this paper, we use administrative data from the Social Security Administration (SSA) to estimate the effect of this policy change on individual claiming behavior. We focus on the first half of the DRC increase (from 3.0 to 5.5 percent) given changes in other SSA policies that coincided with the later increases. Our findings demonstrate that the increase in the DRC led to a significant increase in delayed claiming of social security benefits and strongly suggest that the effects were larger for those with higher lifetime incomes, who would have a greater financial incentive to delay given their longer life expectancies.

Suggested Citation

  • Mark Duggan & Irena Dushi & Sookyo Jeong & Gina Li, 2021. "The Effect of Changes in Social Security's Delayed Retirement Credit: Evidence from Administrative Data," NBER Working Papers 28919, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28919
    Note: AG LS PE
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    Cited by:

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    2. Wifo, 2023. "WIFO-Monatsberichte, Heft 8/2023," WIFO Monatsberichte (monthly reports), WIFO, vol. 96(8), August.
    3. Yu, Zhixiu, 2024. "Why are older men working more? The role of social security," Journal of Public Economics, Elsevier, vol. 231(C).
    4. Courtney Coile, 2023. "Changing Retirement Incentives and Retirement in the US," NBER Chapters, in: Social Security Programs and Retirement around the World: The Effects of Reforms on Retirement Behavior, National Bureau of Economic Research, Inc.
    5. Marian Fink & Christine Mayrhuber & Silvia Rocha-Akis, 2023. "Abgabenbelastung bei Kombination von Pensions- und Erwerbseinkommen," WIFO Monatsberichte (monthly reports), WIFO, vol. 96(8), pages 539-551, August.
    6. Xueyi Wang & Taiyi He & Ke Li, 2023. "Regional Population and Public Services under the Framework of Sustainable Development: Evidence from a Typical High-Tech Zone in China," Sustainability, MDPI, vol. 15(17), pages 1-16, September.
    7. Daniel Reck & Arthur Seibold, 2023. "The Welfare Economics of Reference Dependence," CRC TR 224 Discussion Paper Series crctr224_2023_450, University of Bonn and University of Mannheim, Germany.

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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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