How Do Subjective Mortality Beliefs Affect the Value of Social Security and the Optimal Claiming Age
Households that delay claiming Social Security are, in effect, making additional purchases of the Social Security annuity. Theoretical calculations show the delayed claiming is optimal, even for high mortality households. Yet most claim well before the theoretically optimal age. This paper investigates whether subjective mortality beliefs contribute to the prevalence of early claiming. The value of delay depends not only on life expectancy, but also on the degree of uncertainty surrounding the age of death. Using data from the Health and Retirement Study, we show that women approaching retirement understate their probabilities of surviving to age 75 by an average of 10 percentage points, whereas men's forecasts are, on average, correct. But both men and women exhibit greater confidence in their ability to forecast their age of death, relative to the predictions of life tables. But these subjective mortality beliefs have little effect on the value of Social Security or the optimal claim age, and cannot explain the prevalence of early claiming. We also find that self-assessed survival probabilities do not predict survival after controlling for health and socio-economic status, indicating a potential for medical underwriting to reduce adverse selection in the annuity market
Year of publication: |
2011
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Authors: | Sun, Wei |
Other Persons: | Webb, Anthony (contributor) |
Publisher: |
[2011]: [S.l.] : SSRN |
Subject: | Sterblichkeit | Mortality | Theorie | Theory | Soziale Sicherheit | Social security |
Saved in:
freely available
Extent: | 1 Online-Ressource (41 p) |
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Series: | |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 9, 2011 erstellt |
Other identifiers: | 10.2139/ssrn.1970312 [DOI] |
Classification: | J26 - Retirement; Retirement Policies ; H55 - Social Security and Public Pensions |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10013117646
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