The consequences of claiming Social Security benefits at age 62

Abstract

Delaying claiming of Social Security old-age benefits past the earliest eligibility age, age 62, raises the monthly benefit for a person's life. Despite arguments from both proponents and opponents of delayed claiming in academia and public discourse, little is known about whether claiming decisions lead to substantively different outcomes. We compare differences in outcomes between age-62 claimants and otherwise similar later claimants that are matched on health, employment, and financial characteristics at age 60. We find that age-62 claimers are substantially less likely to work after 62 and have persistently lower income into their 70s. Differences in assets emerged in the 70s, with early claimants having lower wealth, but we find no differences in mortality or self-reported financial hardship. The difference in wealth is driven primarily by a growth in wealth among later claimants rather than substantial decumulation by age-62 claimants.

Introduction to special issue on institutional influences on retirement, health and well-being

“…Using their matched group of men who are married and working at age 60, they estimate different outcomes across their 60s and 70s. Armour and Knapp (2021) find that the consequences of claiming at the earliest eligibility age are as expected: greater social security income after age 64, greater likelihood of continuing work, and further accumulation of assets for those that delay claiming. Importantly, they find no difference in mortality or measures of financial hardship.…”

“…But there has been little evidence on how early claimants fare after claiming. Armour and Knapp (2021) ask whether claiming at age 62 has discernable differences in financial and other well-being outcomes. They exploit the long panel of the HRS to match individuals who do and do not claim at age 62 but are otherwise observationally similar at age 60 along a number of dimensions, including demographics, whether they are working, and their income, assets, health, and survival expectations.…”