Household balance sheet, home equity, and withdrawal of social security retirement income (SSRI)
Abstract
This paper examines how changes in house prices affect the timing of when eligible individuals decide to start receiving Social Security Retirement Income (SSRI). As changes in the price of housing and SSRI withdrawal decisions are likely to be correlated with unobserved local demand shocks, we employ an instrumental variables strategy using the land supply elasticity of an MSA interacted with changes in the national housing price index as an instrument for the value of a home. We find that an increase in the value of a home causes elderly individuals to delay SSRI claiming once they are eligible during the housing boom period, but we do not find a statistically significant impact on the claim decision during the bust period. Our findings highlight the potential channel of cashing out home equity in replace of receiving SSRI early for seniors to finance retirement during the housing boom period.