The Early Acceptance of Social Security: An Asset Maximization Approach

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Abstract
This paper, using a sample from the 1973 Social Security Exact Match File, tests the importance of economic factors in the decision of male workers to take social security (OASI) benefits at age 62. Previous studies of this decision have concentrated on the flow of pension benefits available to the worker in a single year, but this study emphasizes the asset nature of such benefits. The potential loss in market earnings when OASI benefits are accepted is weighed against the change in the total potential value of private pension and OASI benefits if retirement is postponed. The present value of the entire potential stream of benefits emerges as more important theoretically and empirically than the value of annual benefits immediately available to the worker.

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