The Role of Information for Retirement Behavior: Evidence Based on the Stepwise Introduction of the Social Security Statement

39 Pages Posted: 24 Dec 2010

See all articles by Giovanni Mastrobuoni

Giovanni Mastrobuoni

University of Turin - Collegio Carlo Alberto; Centre for Economic Policy Research (CEPR); IZA

Multiple version iconThere are 2 versions of this paper

Date Written: August 1, 2010

Abstract

In 1995, the Social Security Administration started sending out the annual Social Security Statement. It contains information about the worker’s estimated benefits at the ages 62, 65, and 70. I use this unique natural experiment to analyze the retirement and claiming decision making. First, I find that, despite the previous availability of information, the Statement has a significant impact on workers’ knowledge about their benefits. These findings are consistent with a model where workers need to gather costly information in order to improve their retirement decision. Second, I use this exogenous variation in knowledge to analyze the optimality of workers’ decisions. Several findings suggest that workers do not change their retirement behavior: i) Workers do not change their expected age of retirement after receiving the Statement; ii) monthly claiming patterns do not show any change after the introduction of the Social Security Statement; iii) workers do not become more sensitive to Social Security incentives after receiving the Statement. More research is needed to establish whether workers are already behaving optimally or they are not, but the information contained in the Statement is not sufficient to improve their retirement behavior.

Keywords: Social Security Statements, Retirement Expectations, Retirement Behavior, Social Security Incentives

JEL Classification: H55, J26

Suggested Citation

Mastrobuoni, Giovanni, The Role of Information for Retirement Behavior: Evidence Based on the Stepwise Introduction of the Social Security Statement (August 1, 2010). Netspar Discussion Paper No. 08/2010-076, Available at SSRN: https://ssrn.com/abstract=1730238 or http://dx.doi.org/10.2139/ssrn.1730238

Giovanni Mastrobuoni (Contact Author)

University of Turin - Collegio Carlo Alberto ( email )

Piazza Arbarello 8
Torino, Torino 10122
Italy

HOME PAGE: http://www.carloalberto.org/people/faculty/assistant-professors-and-chairs/mastrobuoni/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

IZA ( email )

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