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The financial feasibility of delaying Social Security: evidence from administrative tax data*

  • GOPI SHAH GODA (a1), SHANTHI RAMNATH (a2), JOHN B. SHOVEN (a3) and SITA NATARAJ SLAVOV (a4)
Abstract

Despite the large and growing returns to deferring Social Security benefits, most individuals claim Social Security before the full retirement age. In this paper, we use a panel of administrative tax data on individuals likely to financially benefit from delaying Social Security claiming to explore the relationship between Social Security claiming and distributions from tax-advantaged retirement savings accounts. We find that the majority of our sample claim Social Security prior to taking distributions from Individual Retirement Accounts (IRAs). We also find that a third of our sample have IRA balances equivalent to at least two additional years of Social Security benefits, and a quarter have IRA balances equivalent to at least 4 years of Social Security benefits. We complement our analysis with data from the Health and Retirement Study and find that these percentages are considerably higher when other financial assets are taken into account.

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Footnotes
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*

The findings and conclusions expressed are solely those of the author(s) and do not represent the views of the U.S. Department of the Treasury, or the NBER. We would like to thank Matthew Rutledge, John Sabelhaus, Dmitry Taubinsky, and seminar participants at George Mason University's Schar School of Policy and Government, the Tax Economists Forum, the Sloan Working Longer Conference, and the National Tax Association Annual Meetings for helpful comments.

Footnotes
References
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Journal of Pension Economics & Finance
  • ISSN: 1474-7472
  • EISSN: 1475-3022
  • URL: /core/journals/journal-of-pension-economics-and-finance
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