Is the Delayed Retirement Credit Regressive?

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by Martha Susana Jaimes Builes, The New School

Using Health and Retirement Study data linked to administrative Social Security records, this study investigates the relationship between the claim age and subsequent mortality, and the impact of the trend towards greater dispersion in claim ages on Social Security finances. To answer this question, I use a hazard model to examine: 1) the extent to which those who delay claiming have lower mortality; and 2) whether adverse selection reflects correlations between socioeconomic status and both claim ages and subsequent mortality or the influence of subjective mortality beliefs. The study then calculates the impact of adverse selection on the Social Security Trust Fund. My preliminary studies using self-reported data indicate that early claimers have substantially higher mortality than those who delay. An implication of this result is that the Social Security’s delayed retirement credit might be more than actuarially fair to those who actually delay claiming.

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