Social Security Payments and Decision about Timing of Retirement: An Economic Analysis

Abstract

This paper seeks to address the question that whether and to what extent does Social Security retirement benefits cause early retirement. ‎This question is studied under “Option Value” and “Peak Value” models, in which the individual's retirement decision is derived as a function of future variations of present value of social security wealth. The‎ results indicate that Social Security (in the form of retirement benefits) has a significant effect on retirement ‎decisions‎ and that the future path of these benefits is an important determinant of the probability of retirement among would-be retired men.

Keywords

• retirement
• social security
• retirement benefits
• social security wealth
• option value model
• peak value model