Does it pay to delay social security?

2013 ◽  
Vol 13 (2) ◽  
pp. 121-144 ◽  
Author(s):  
JOHN B. SHOVEN ◽  
SITA NATARAJ SLAVOV
Keyword(s):  
Social Security ◽  
Interest Rates ◽  
Real Interest Rate ◽  
Mortality Rates ◽  
Present Value ◽  
Actuarial Fairness ◽  
Low Interest Rates ◽  
Social Security Benefits ◽  
To Receive ◽  
Mortality Improvements

AbstractSocial Security benefits may be commenced at any time between ages 62 and 70. As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit to reflect the age at which benefits are claimed. We investigate the actuarial fairness of that adjustment in light of recent improvements in mortality and historically low interest rates. We show that delaying is actuarially advantageous for a large number of people, even for individuals with mortality rates that are twice the average. At real interest rates closer to their historical average, singles with mortality that is substantially greater than average do not benefit from delay, although primary earners with high mortality can still improve the present value of the household's benefits through delay. We also investigate the extent to which the actuarial advantage of delay has grown since the early 1960s, when the choice of when to claim first became available, and we decompose this growth into three effects: (1) the effect of changes in Social Security's rules, (2) the effect of changes in the real interest rate, and (3) the effect of changes in life expectancy. Finally, we quantify the extent to which the gains from delay can be expected to increase in the future as a result of mortality improvements.

scholarly journals Actuarial fairness in social security calculations: application of a multiple decrement model to compare the social security factor and minimum age rules

2018 ◽  
Vol 29 (78) ◽  
pp. 469-486
Author(s):  
André Luiz Lemos Andrade Gouveia ◽  
Filipe Costa de Souza ◽  
Leandro Chaves Rêgo
Keyword(s):  
Social Security ◽  
Constitutional Amendment ◽  
Social Welfare Policy ◽  
Social Security Reform ◽  
Standard Family ◽  
The Social ◽  
Actuarial Fairness ◽  
Minimum Age ◽  
Current Scenario ◽  
Social Security Benefits

Abstract It has been shown that under the social security factor rule current contribution rates are insufficient to cover social security benefits, since the actuarially fair rates are 30.69% and 35.27% for men and women, respectively. However, if the social security reform were approved as submitted, the fair rates would be reduced to 22.25% and 21.60%, respectively. Besides the minimum age, part of this reduction is due to the proposed rules allowing pension values lower than the minimum wage. These results served the objective of this work, which was to compare the actuarially fair social security rates for the General Social Welfare Policy (GSWP), based on the social security factor rules and the minimum age proposal present in Proposed Constitutional Amendment n. 287/2016. The demographic changes that have taken place in Brazil in recent years raise questions about the sustainability of the national social security system and approving social security reform has been a government priority. Therefore, there is an undisputed need for an actuarial study that calculates actuarially fair rates and compares the current scenario with the reform proposals. Multiple decrement actuarial models were used to calculate the fair rates considering a standard family (25-year-old worker, spouse, and two children), in which the man is three years older than the woman. The IBGE 2015 Extrapolated (mortality) and Álvaro Vindas (disability) tables were adopted as biometric assumptions, and a real wage growth rate of 2% p.a. and real interest rate of 3% p.a. were used.

In Debt and Approaching Retirement: Claim Social Security or Work Longer?

2018 ◽  
Vol 108 ◽  
pp. 401-406 ◽  
Author(s):  
Barbara A. Butrica ◽  
Nadia S. Karamcheva
Keyword(s):  
Older Adults ◽  
Social Security ◽  
Labor Force ◽  
Social Security Benefit ◽  
Older Americans ◽  
The Past ◽  
Using Data ◽  
Social Security Benefits ◽  
To Receive ◽  
Retirement Study

Over the past couple of decades, older Americans have become considerably more leveraged. This paper considers whether household debt affects the timing of retirement and Social Security benefit claiming. Using data from the Health and Retirement Study, we find that older adults with debt are more likely to work and less likely to receive Social Security benefits than those who are debt-free. Indebted adults are also more likely to delay fully retiring from the labor force and claiming their benefits. Among the sources of debt, mortgages have a stronger impact on older adults' behavior than do other sources of debt.

scholarly journals Proposed Changes to Social Security: An Analysis

2011 ◽  
Vol 4 (2) ◽  
Author(s):  
Robert E. Pritchard ◽  
Gregory C. Potter
Keyword(s):  
Social Security ◽  
Interest Rates ◽  
Baby Boomers ◽  
Next Generation ◽  
Government Programs ◽  
Future Demands ◽  
Social Security Benefits ◽  
Retired Workers

Some 48 million Americans are expected to collect around $518 billion in Social Security benefits during 2005.  Of these, about 70 percent are retired workers.  The ratio of workers covered by Social Security to retirees is approximately three to one but will decrease to about two to one in the next generation.  Furthermore, at present, there are significantly more Social Security taxes collected than benefits paid; the excess is spent to help fund other government programs.  With the Baby Boomers starting to collect benefits in 2008 and large federal deficits already threatening to push interest rates higher, providing for future Social Security funding is being addressed.  This paper explores existing and future demands expected to be placed on Social Security and possible changes that may be implemented to ensure its long-term viability.

The Effects of the Great Recession on the Retirement Security of Older Workers

2013 ◽  
Vol 650 (1) ◽  
pp. 124-142 ◽  
Author(s):  
Alicia H. Munnell ◽  
Matthew S. Rutledge
Keyword(s):  
Social Security ◽  
Interest Rates ◽  
Great Recession ◽  
Older Workers ◽  
Job Loss ◽  
Older Americans ◽  
The Great Recession ◽  
Retirement System ◽  
Retirement Security ◽  
Low Interest Rates

The Great Recession had a profound effect on the retirement security of older Americans, and the slow recovery from the downturn will have a lasting impact on their quality of life. The nature of today’s retirement system left older households exposed to the collapse in the equity and housing markets and induced many to plan for a later retirement. More late-career workers experienced job loss than in previous recessions, often with long jobless spells, encouraging a record number of early Social Security retirement claims and disability applications. Going forward, workers who lost a job can expect lower earnings and more instability and, potentially, poorer health. Even households that avoided job loss will have less money available for spending in retirement due to low interest rates and reduced home values. These findings emphasize the importance of Social Security as income insurance and the need for a more robust retirement income system.

Monetary Policy and Unnatural Low Interest Rates: Secular Stagnation or Financial Repression?

2019 ◽  
Vol 70 (2) ◽  
pp. 99-135 ◽  
Author(s):  
Ad van Riet
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Real Interest Rate ◽  
Central Banks ◽  
Potential Growth ◽  
Secular Stagnation ◽  
Financial Repression ◽  
Low Interest Rates ◽  
Equilibrium Real Interest Rate

Abstract Market interest rates have been on a declining trend over the past 35 years in all advanced economies, even reaching negative territory in some European jurisdictions. This article reviews two competing explanations for the occurrence of unnatural low interest rates. The secular stagnation hypothesis of Keynesian origin maintains that persistent non-monetary factors have caused a structural excess of desired savings over planned investments which steadily pushed down the equilibrium real interest rate that is consistent with a balanced economy. Major central banks in turn failed to sufficiently lower their monetary policy rates to revive aggregate demand, leading to anaemic economic recoveries and hysteresis effects. By contrast, the financial repression doctrine argues that central banks pursued low interest rates to ease the government budget constraint and serve political objectives. The Austrian School of Economics states that this monetary easing bias sowed the seeds of repeated boom/bust cycles and created economic distortions that dragged down potential growth and the equilibrium real interest rate. The core of the debate appears to be the long-standing controversy about the desirable role for the state in guiding the economy on a higher potential growth path as opposed to relying on the efficiency of market processes in generating prosperity.

scholarly journals Marital Biography, Social Security Receipt, and Poverty

2016 ◽  
Vol 39 (1) ◽  
pp. 86-110 ◽  
Author(s):  
I-Fen Lin ◽  
Susan L. Brown ◽  
Anna M. Hammersmith
Keyword(s):  
Social Security ◽  
Well Being ◽  
Diverse Range ◽  
Never Married ◽  
Poverty Status ◽  
And Gender ◽  
Using Data ◽  
Social Security Benefits ◽  
To Receive ◽  
Economic Well Being

Increasingly, older adults are unmarried, which could mean a larger share is at risk of economic disadvantage. Using data from the 2010 Health and Retirement Study, we chart the diverse range of marital biographies, capturing marital sequences and timing, of adults who are age eligible for Social Security and examine three indicators of economic well-being: Social Security receipt, Social Security benefit levels, and poverty status. Partnereds are disproportionately likely to receive Social Security and they enjoy relatively high Social Security benefits and very low poverty levels. Among singles, economic well-being varies by marital biography and gender. Gray divorced and never-married women face considerable economic insecurity. Their Social Security benefits are relatively low, and their poverty rates are quite high (over 25%), indicating Social Security alone is not sufficient to prevent these women from falling into poverty. By comparison, gray widoweds are the most advantaged singles.

scholarly journals Reducing The Downside Risk Of Not Receiving Anticipated Social Security Benefits By Using Personal Accounts

2011 ◽  
Vol 6 (1) ◽  
Author(s):  
Robert E. Pritchard ◽  
Gregory C. Potter
Keyword(s):  
Social Security ◽  
Downside Risk ◽  
Retirement Income ◽  
Personal Account ◽  
Font Size ◽  
The Government ◽  
Personal Accounts ◽  
The Right ◽  
Social Security Benefits ◽  
To Receive

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">The government is not obligated to pay Social Security benefits and no one has the right to receive such benefits.<span style="mso-spacerun: yes;">&nbsp; </span>This paper presents the argument that opting for a personal account in conjunction with traditional Social Security is less risky than opting to have all of ones Social Security taxes go into traditional Social Security.<span style="mso-spacerun: yes;">&nbsp; </span>The overall downside risk of receiving lower than anticipated Social Security retirement income is reduced by diversifying to include personal accounts along with traditional Social Security.<span style="mso-spacerun: yes;">&nbsp; </span></span></span></p>

Bezpieczeństwo socjalne imigrantów w Polsce na przykładzie miasta Gdańska

2018 ◽  
Vol 16 (16) ◽  
pp. 165-183
Author(s):  
Joanna Rosłon-Żmuda
Keyword(s):  
Social Security ◽  
Financial Support ◽  
European Countries ◽  
Good Chance ◽  
Social Security Benefit ◽  
International Protection ◽  
The Republic ◽  
Polish Law ◽  
Social Security Benefits ◽  
To Receive

According to Polish law, immigrants seeking international protection in Poland are eligible to receive social help either at immigrants centers or outside, in the forms of social security benefits for covering costs of staying in the Republic of Poland. The amount of social security benefit in Poland is relatively low, therefore many immigrants seek a better place for themselves in wealthier European countries. Proposed by Gdańsk authorities modal solutions concerning social help for immigrants are based on integration and assimilation processes which are worth noting. Model of Immigrants Integration with the verbal and financial support offered by governmental administration have a good chance of bringing multiple benefits both for the Polish community as well as the Polish industry.

Inheritance of unpaid amounts provided to a citizen as a means of subsistence

2021 ◽  
pp. 20-22
Author(s):  
N. Zhilskij ◽  
N. Golovanov
Keyword(s):  
Social Security ◽  
Russian Federation ◽  
Civil Code ◽  
The Russian Federation ◽  
The Right ◽  
Social Security Benefits ◽  
To Receive

According to Art. 1183 of the Civil Code of the Russian Federation (Civil Code of the Russian Federation), the right to receive payable to the testator, but not received by him during his lifetime for any reason, the amount of wages and equivalent payments; pensions; scholarships; social security benefits; alimony; amounts of compensation for harm caused to life or health; other sums of money provided to a citizen as a means of subsistence belong to those who lived together with the deceased members of his family, as well as his disabled dependents, regardless of whether they lived with the deceased or did not live. Requests for the payment of these amounts must be presented to the obligated persons within four months from the date of opening the inheritance.

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