Exploring How Uncertainty in Longevity Estimates Predicts SSA Claiming Decisions

As the population ages, more adults will be faced with the complex decision about when to claim Social Security Administration (SSA) benefits. Previous research on SSA claiming decisions found that self-reported subjective longevity is an important input in the decision to claim benefits early. While people might form beliefs about their life expectancies, the uncertainty around these expectations may vary greatly, a question unexamined by previous research. For example, two people might share the same expectation for longevity (e.g., 86 years), but one might see little chance of exceeding age 90 while the other sees a 40% chance of exceeding age 90. In the present paper, we first explore how heterogeneity in uncertainty around expectations predict differences in SSA claiming decisions. Secondly, we assess whether focusing on the “right” versus the “left” tails of uncertainty while holding constant the expectation differentially affects claiming decisions. Our results indicate that, first, while individuals are highly sensitive to longevity likelihood, they are not differentially sensitive to subjective probabilities of living to 65, 80, or 95. That is, they are sensitive to the center of the distribution, but not its tails. Second, calling attention to the link between claiming age and left- and right-tail risks causes individuals to adjust their claiming age intentions to minimize the salient risks.