The Effect of State Retirement Benefit Policies on Social Security Claiming

• In Event: Public Policy and Economic Wellbeing from Employment to Retirement

Abstract

Social Security is the bedrock of financial well-being during retirement. The decision of when to claim Social Security is complex and has implications for older adults’ financial security. While delaying Social Security claiming is associated with higher monthly benefits, majority of older adults claim before their Full Retirement Age (Enfelhardt et. al. 2022; Armour and Knapp 2023, Slavov 2025), which not only reduces Social Security income but also increases reliance on personal retirement savings. In recent years, several states have introduced state-run retirement policies (commonly referred to as Auto IRA policies) aimed at improving individuals’ retirement savings. These policies reduce barriers for workers to save for retirement by requiring all employers to provide workplace retirement savings plans and facilitating contributions through payroll deductions.

In this paper, we evaluate the effect of adoption of state Auto IRA policies on individuals’ timing of Social Security claiming. Drawing data from the Current Population Survey (CPS) Annual Social and Economic Survey (CPS ASEC) spanning from 2010  to 2024, we  employ Two-Way Fixed Effects and Dynamic Staggered Difference-in-Differences models to estimate casual effects. Preliminary results indicate that individuals delay SS claiming, with the impact centered among early adopter states, suggesting that the policy has long-term effects on household retirement decisions. To further unpack these dynamics, we explore heterogenous treatment effects across subgroups defined by race, gender, and educational attainment.

Author

• Manita C Rao, University of Southern California
  Presenting Author