Public Pension Design and Household Retirement Decisions: A Comparison of the United States and Germany

Published: 2021


Social Security provides retirement benefits to age-eligible workers and their spouses. Benefits are permanently increased if initial receipt is delayed. For benefits paid to spouses, these incentives reflect a complex interaction of the worker’s and spouse’s earnings histories, benefit claiming decisions, and age difference. We demonstrate that the benefit increment from delaying initial receipt of spousal and survivor benefits is substantial for some households. Past studies find that workers respond to potential increments in their own benefit by delaying labor force exit. Using a nationally representative panel, we investigate whether an additional dollar in expected lifetime benefits paid to the worker directly is treated the same as an additional dollar paid to the worker’s spouse from spouse and survivor benefits. We find minimal evidence that workers or their spouses change retirement behavior in a way that is theoretically consistent with spouse and survivor benefit claiming incentives. The lack of responsiveness suggests that incentives to delay claiming for benefits other than the worker’s own are not salient in the worker’s decision-making. This may reflect the complexity of benefit rules or different preferences concerning benefits paid to others. A parallel analysis using German data, where rules surrounding survivor benefits are simpler, finds that workers respond in a theoretically consistent way, but small sample sizes prevent conclusive results. Our findings suggest models estimating the policy impact of reducing spousal and survivor benefits on female labor supply are likely overstated, and that a greater understanding of survivor benefits may lead to better claiming decisions for couples.

Key Findings

    • Social Security’s spousal and survivor benefits provide substantial additional lifetime benefits to households entitled to them.
    • The design of Social Security encourages delayed claiming through increasing own and survivor benefit payments, but discourages delayed claiming by households entitled to a spousal benefit because the worker must claim in order for the spouse to receive a spousal benefit.
    • Consistent with past research, we find incentives to delay claiming are associated with continued work, but only in the case of a worker’s own benefit.
    • For married working men, we find that incentives from survivor benefits to delay claiming and incentives from spousal benefits to claim sooner are not associated with their decision to retire.
    • For married working women, we find that supplemental benefits from their husband’s spousal and survivor benefits, which should provide a disincentive to continue working, are not strongly associated with their retirement timing.
    • Repeating our analysis for German couples, where benefit rules and incentives pertaining to survivor benefits are less complex, we find that workers respond to incentives to delay claiming in a way that is consistent with the incentives created by survivor benefits, but small sample sizes prevent conclusive results.


Knapp, David, Jinkook Lee, Maciej Lis, and Drystan Phillips. 2021. “Public Pension Design and Household Retirement Decisions: A Comparison of the United States and Germany.” Ann Arbor, MI. University of Michigan Retirement and Disability Research Center (MRDRC) Working Paper; MRDRC WP 2021-417.