To claim or to retire: The social security claiming decision of employed and unemployed workers

TitleTo claim or to retire: The social security claiming decision of employed and unemployed workers
Publication TypeJournal Article
Year of Publication2017
AuthorsFawaz, Y
JournalInternational Journal of Manpower
Volume38
Issue3
Pagination392-416
Date PublishedMay-06-2017
ISSN Number0143-7720
KeywordsEmployment and Labor Force, Social Security
Abstract

Purpose
The purpose of this paper is to use the Health and Retirement Study to examine the social security (SS) claiming decision of older Americans, with a focus on the behavior of the unemployed.

Design/methodology/approach
Using a duration model first, and a bivariate probit framework then, the author investigates whether older unemployed individuals lacking liquidity use SS benefits as a safety net in order to finance consumption during an unemployment episode, even if they do not retire at the same time. In this way, SS might be thought as a form of unemployment insurance (UI) which would allow them to maintain their standard of living during their job search.

Findings
The author finds evidence of a claiming pattern specific to the unemployed: they claim sooner than full-time workers, even when they do not retire at the same time. They also seem to discontinue this behavior when their access to UI is extended, which gives support to the author’s hypothesis that the unemployed workers, who lack liquidity, claim their SS benefits even if they do not wish to retire, as a source of alternative unemployment benefits.

Originality/value
By focusing on the SS claiming behavior of the unemployed rather than on their retirement patterns, this paper sheds light on the social insurance role of SS retirement benefits for unemployed workers who are not willing to retire, but need a new source of income while they continue looking for a job.

URLhttp://www.emeraldinsight.com/doi/10.1108/IJM-08-2015-0127
DOI10.1108/IJM-08-2015-0127
Short TitleInt J of Manpower
Citation Key9072