AEDE Applied Economics Seminar presented by Amanda Ross, University of Alabama

Mar 22, 2019, 10:30am - 12:00pm

Amanda Ross, Assistant Professor of Economics at the University of Alabama, will present “Home Equity and the Timing of Claiming Social Security Retirement Income” on Friday, March 22nd from 10:30AM-12:00PM in Room 250A, Agricultural Administration Building (2120 Fyffe Road, Columbus, OH 43210). This event is open to the public. RSVPs are not required. Light refreshments will be served prior to the presentation beginning at 10:00AM.


Abstract: We examine the extent to which changes in house prices affect when eligible individuals start receiving Social Security Retirement Income. When a household starts to receive Social Security is important because the timing of the claiming decision affects the monthly benefits. If house prices increase, elderly households may draw upon the additional home equity to finance expenses and delay receipt of Social Security to receive the larger monthly benefits. Since changes in house prices and the claiming of Social Security are likely to be correlated with unobserved local demand shocks, we employ an instrumental variables strategy. Our instrument for the change in house prices is the land supply elasticity of an MSA interacted with changes in the national house price index. Using restricted data from the Health and Retirement Survey, we find that the elderly delay Social Security claiming when house prices increase during a boom period, but not during a bust. Our findings also suggest that financially constrained households are more likely to delay claiming Social Security if house prices appreciate and do so by remaining in their current residences but increasing the amount of their home loans.