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The effect of Social Security information on the labor supply and savings of older Americans. (Armour & Lovenheim 2016)

Absence of conflict of interest.

Citation

Armour, P., & Lovenheim, M. F. (2016). The effect of Social Security information on the labor supply and savings of older Americans. (Working paper no. 361). Ann Arbor, MI: University of Michigan, Michigan Retirement Research Center.

Highlights

  • The study examined the impact of the Social Security statements issued by the Social Security Administration (SSA) on older men’s annual hours worked.
  • The authors used a nonexperimental design and data from Health and Retirement Study surveys and Social Security administrative records to estimate the impacts.
  • The study found that receiving the first Social Security Statement is associated with a decrease in self-reported annual hours worked and receiving the second Social Security Statement is associated with an increase in self-reported annual hours worked.
  • The quality of casual evidence presented in this report is moderate because that the study was based on a well-implemented nonexperimental design. This means we are somewhat confident that the estimated effects are attributable to Social Security statements, but other factors might also have contributed.

Intervention Examined

Social Security statements

Features of the Intervention

The Social Security Administration sends workers younger than age 60 Social Security Statements, which provide an estimate of possible Social Security benefits based on extrapolating current earnings through three possible retirement ages (the early retirement age at 62 years old; the full retirement age at 65 to 67 years old, depending on the recipient's birth year; and age 70). Social Security Statements were phased in slowly over time based on people’s birth year and month. SSA sent the first Social Security Statement to those 60 and older in 1995, 58 to 60 in 1996, 53 to 58 in 1997, 47 to 53 in 1998, and 40 to 47 in 1999. The SSA sent second statements to the same people between 2000 and 2002.

Features of the Study

The study is a nonexperimental analysis that used statistical models to estimate the association between receiving Social Security statements and the self-reported annual hours worked. The study sample was men ages 51 to 62 from 1995 to 2002 who had at least 40 qualifying quarters (one of Social Security’s eligibility requirements) by 1991. Drawing on data from the Health and Retirement Study surveys and Social Security administrative earnings data, the authors used regression analyses.

Findings

Employment

  • The study found that receiving the first Social Security Statement was associated with a 119 hour reduction in self-reported annual hours worked.
  • The study also found that receiving the second Social Security Statement was associated with a 144 to 495 hour increase in self-reported annual hours worked for those working full time before receiving the statement.

Considerations for Interpreting the Findings

The study is a nonexperimental study that demonstrates that the treatment and comparison groups had similar employment trends before the intervention.

Causal Evidence Rating

The quality of casual evidence presented in this report is moderate because that the study was based on a well-implemented nonexperimental design. This means we are somewhat confident that the estimated effects are attributable to Social Security Statements, but other factors might also have contributed.

Reviewed by CLEAR

October 2019

Topic Area