The Social Security Benefits Timing Decision: A Model for Lower-Income Recipients

Abstract

Selecting the best age to begin social security benefits is an important election for lower-income individuals. These individuals are especially vulnerable to the timing and magnitude of critical cash flow. Unfortunately, the decision models and measures being used by individuals to analyze financial decisions, including the social security benefits timing decision, often are the same measures that have been developed to guide large business organizations in their financial decisions. Because of significant differences in economic flexibility, size, life cycle, mission, goals, as well as other attributes, large organization models may not fit the needs of lower-income individuals. However, lower-income individuals do need to focus on key strategic measures when making financial decisions. Therefore, new measures specifically designed to meet the unique needs of lower-income individuals should be developed. This paper illustrates one approach by measuring the quality-value of marginal social security benefit dollars for lower-income retirees and their families.

Keywords: Social Security benefits, low-income beneficiaries

JEL Classification: H31, H53, H55, I31, J14, J26