Association for Public Policy Analysis & Management

The Social Security Administration provides insurance benefits amounting to a quarter of the federal budget, greatly alleviating poverty among the elderly and disabled. However, the extent to which individuals understand the incentives contained in these insurance programs and change their behavior in response is still unclear. Additionally, for the past two decades, SSA has embarked on a proactive information dissemination campaign to better educate potential beneficiaries concerning their suite of SSA benefits. This paper leverages the reintroduction of the automatic Social Security Statement in 2014 to better understand how individuals integrate future Social Security benefits into their work and savings behavior. This analysis fields a survey to a nationally representative sample of RAND American Life Panel working-age adult respondents who answered detailed questions on Social Security knowledge, as well as on their savings, labor supply, and benefit expectations, in 2013, before the Statement’s reintroduction. In contrast to prior studies on the impact of the Social Security Statement, the ALP allows for annual measures of SSA benefit expectations, and, in combination with an extensive 2010 module on SSA program knowledge, makes viable a first-stage analysis of the effects of the Statement on SSA expectations, then through these changes in expectations, the resulting effects on savings and work behavior. Most importantly, it provides insight as to the mechanisms of these changes, elucidating what kind of recipients, in particular with regard to age and pre-existing program knowledge and expectations (e.g., belief in the future sustainability and generosity of SSA programs themselves), are most responsive to the Statement. It will also indicate the features of the Statement that are most impactful as well as the ways in which people newly informed as to their SSA benefits incorporate this knowledge into their decisions over labor supply and retirement planning.