Managing the Risk of Life

Abstract

This study analyzes the role of individual’s and spouse’s survival expectations and knowledge about Social Security rules on the expected Social Security claiming age, taking into account the various incentives single and married individuals face. There is substantial heterogeneity in the level of knowledge about SS rules according to demographic characteristics. We find that single men and women who expect to be longlived plan on delaying Social Security claiming. When we allow for differential effects of survival on knowledge about Social Security rules, subjective survivals matter only for
\nsingle women who are knowledgeable. For single men, knowledge is not so important in
\ntheir decisions. The claiming decision of married individuals is more complicated,
\nbecause they are entitled to spouse’s and survivor’s benefits. Consistent with the
\nincentives provided by Social Security rules, we find that married men base their
\nexpected claiming age on their spouse’s survival expectations but not on their own
\nsurvival. For married women, both own and spouse’s subjective survivals positively
\ninfluence the timing of claiming. Knowledge about Social Security rules affects the
\nexpected claiming age of both married men and women.