[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/mrr/papers/wp182.html
   My bibliography  Save this paper

Individuals’ Responses to Social Security Reform

Author

Listed:
  • Adeline Delavande

    (RAND and Universidade Nova de Lisboa)

  • Susann Rohwedder

    (RAND)

Abstract
The Social Security trust fund is predicted to be depleted by 2041. While there are several viable reform proposals to restore long-term solvency of the Social Security system, one important element that is critical to the success of any reform remains unknown: how will individuals respond to, for example, a cut of their Social Security benefits. Will they work longer or save more or both, and to what extent will their response make up for the cut in benefits? In this paper we use data from the HRS Internet Survey where we asked respondents directly what they would do if everyone’s Social Security benefits were cut by 30 percent. At a qualitative level, we find important differences in the response by sex, marital status, and SES, among others. We conduct a detailed quantitative analysis of response to timing of Social security claiming and find that on average individuals would postpone claiming Social Security by 1.13 years. If this time was spent working by everyone then the annual Social Security benefit would drop on average by 20 percent rather than the initial 30 percent imposed by the reform. In other words the response to claim later and work longer would make up for one third of the initial cut in Social Security benefits.

Suggested Citation

  • Adeline Delavande & Susann Rohwedder, 2008. "Individuals’ Responses to Social Security Reform," Working Papers wp182, University of Michigan, Michigan Retirement Research Center.
    • Handle: RePEc:mrr:papers:wp182
    as

    Download full text from publisher

    File URL: http://www.mrrc.isr.umich.edu/publications/Papers/pdf/wp182.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alan L. Gustman & Thomas L. Steinmeier, 2008. "Projecting behavioral responses to the next generation of retirement policies," Research in Labor Economics, in: Work, Earnings and Other Aspects of the Employment Relation, pages 141-195, Emerald Group Publishing Limited.
    2. Emma Aguila, 2011. "Personal Retirement Accounts and Saving," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 1-24, November.
    3. Emma Aguila, 2011. "Personal Retirement Accounts and Saving," American Economic Journal: Economic Policy, American Economic Association, pages 1-24.
    4. Adeline Delavande & Susann Rohwedder, 2008. "Eliciting Subjective Expectations in Internet Surveys," Working Papers 589, RAND Corporation.
    5. Orazio Attanasio & Susanne Rohwedder, 2001. "Pension wealth and household saving: evidence from pension reforms in the UK," IFS Working Papers W01/21, Institute for Fiscal Studies.
    6. Orazio P. Attanasio & Agar Brugiavini, 2003. "Social Security and Households' Saving," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 1075-1119.
    7. Orazio P. Attanasio & Susann Rohwedder, 2003. "Pension Wealth and Household Saving: Evidence from Pension Reforms in the United Kingdom," American Economic Review, American Economic Association, vol. 93(5), pages 1499-1521, December.
    8. Michael D. Hurd & Pierre-Carl Michaud & Susann Rohwedder, 2008. "Using International Micro Data to Learn about Individuals' Responses to Changes in Social Insurance," Working Papers WR-626, RAND Corporation.
    9. Adeline Delavande & Susann Rohwedder, 2008. "Eliciting Subjective Expectations in Internet Surveys," Working Papers WR-589, RAND Corporation.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andries De Grip & Maarten Lindeboom & Raymond Montizaan, 2012. "Shattered Dreams: The Effects of Changing the Pension System Late in the Game," Economic Journal, Royal Economic Society, vol. 122(559), pages 1-25, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luigi Guiso & Tullio Jappelli & Mario Padula, 2009. "Pension Risk, Retirement Saving and Insurance," CSEF Working Papers 223, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    2. Delavande, Adeline & Rohwedder, Susann, 2017. "Changes in spending and labor supply in response to a Social Security benefit cut: Evidence from stated choice data," The Journal of the Economics of Ageing, Elsevier, vol. 10(C), pages 34-50.
    3. Talosaga Talosaga & Mark Vink, 2014. "The Effect of Public Pension Eligibility Age on Household Saving: Evidence from a New Zealand Natural Experiment," Treasury Working Paper Series 14/21, New Zealand Treasury.
    4. José Luis Iparraguirre, 2020. "Economics and Ageing," Springer Books, Springer, number 978-3-030-29019-1, June.
    5. Marta Lachowska & Michał Myck, 2018. "The Effect of Public Pension Wealth on Saving and Expenditure," American Economic Journal: Economic Policy, American Economic Association, vol. 10(3), pages 284-308, August.
    6. Jappelli, Tullio & Padula, Mario & Bottazzi, Renata, 2005. "Retirement Expectations, Pension Reforms and Their Effect on Private Wealth Accumulation," CEPR Discussion Papers 4882, C.E.P.R. Discussion Papers.
    7. Tzu-Ting Yang, 2016. "The Effect of Workplace Pensions on Household Saving: Evidence from a Natural Experiment in Taiwan," IEAS Working Paper : academic research 16-A013, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    8. Esteban García-Miralles & Jonathan M. Leganza, 2024. "Public Pensions and Private Savings," American Economic Journal: Economic Policy, American Economic Association, vol. 16(2), pages 366-405, May.
    9. Sita Slavov & Devon Gorry & Aspen Gorry & Frank N. Caliendo, 2019. "Social Security and Saving: An Update," Public Finance Review, , vol. 47(2), pages 312-348, March.
    10. Francesca Carta & Marta De Philippis, 2021. "Working horizon and labour supply: the effect of raising the full retirement age on middle-aged individuals," Temi di discussione (Economic working papers) 1314, Bank of Italy, Economic Research and International Relations Area.
    11. Garry F. Barrett & Yi-Ping Tseng, 2008. "Retirement Saving in Australia," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 177-193, November.
    12. Ke Meng & Shouhao Li, 2023. "Welfare Regimes and Intergenerational Social Mobility: An Institutional Explanation of the Great Gatsby Curve," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(1), pages 355-375, January.
    13. Imrohoroglu, Selahattin & Kitao, Sagiri, 2009. "Labor supply elasticity and social security reform," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 867-878, August.
    14. Armel Ngami & Thomas Seegmuller, 2021. "Pollution and growth: The role of pension in the efficiency of health and environmental policies," International Journal of Economic Theory, The International Society for Economic Theory, vol. 17(4), pages 390-415, December.
    15. Blau, David M., 2011. "Pensions, Household Saving, and Welfare: A Dynamic Analysis," IZA Discussion Papers 5554, Institute of Labor Economics (IZA).
    16. Etgeton, Stefan & Fischer, Björn & Ye, Han, 2023. "The effect of increasing retirement age on households’ savings and consumption expenditure," Journal of Public Economics, Elsevier, vol. 221(C).
    17. Madeira, Carlos, 2021. "The long term impact of Chilean policy reforms on savings and pensions," The Journal of the Economics of Ageing, Elsevier, vol. 19(C).
    18. Creedy, John & Gemmell, Norman & Scobie, Grant, 2015. "Pensions, savings and housing: A life-cycle framework with policy simulations," Economic Modelling, Elsevier, vol. 46(C), pages 346-357.
    19. Todd Kumler & Eric Verhoogen & Judith Frías, 2020. "Enlisting Employees in Improving Payroll Tax Compliance: Evidence from Mexico," The Review of Economics and Statistics, MIT Press, vol. 102(5), pages 881-896, December.
    20. Christoph Breunig & Steffen Huck & Tobias Schmidt & Georg Weizsäcker, 2021. "The Standard Portfolio Choice Problem in Germany," The Economic Journal, Royal Economic Society, vol. 131(638), pages 2413-2446.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mrr:papers:wp182. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MRRC Administrator (email available below). General contact details of provider: https://edirc.repec.org/data/isumius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.