Social Security Household Benefits: Measuring Program Knowledge

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Abstract

Social Security offers two types of benefits for spouses: spousal and survivor benefits. Regardless of his or her own work history, a married individual can claim spousal Social Security benefits, which are equal to half of his or her spouse’s Social Security benefits. Furthermore, a widow or widower can claim survivor benefits and receive or his or her deceased spouse’s full benefit if it is larger than his or her own benefit. Ideally, married individuals think about the impact of their Social Security choices on their spouse. However, if people do not fully understand the rules for the spousal and survivor benefits, they may make suboptimal choices, not only about Social Security claiming, but perhaps also about labor and marriage decisions. In this paper we make use of new data from the Understanding America Study to assess households’ understanding of these benefits. Overall, our results suggest that knowledge of spousal and survivors benefits is low. Furthermore, our results suggest that people’s perceptions of their knowledge is misaligned with their actual knowledge, with many perceiving that they know more about Social Security than they actually do. The results in this paper suggest particular areas where policymakers might be able to increase knowledge of spousal and survivors benefits. However, future research is needed to better understand how to increase knowledge in this area.

Key Findings

  • Overall, we find that while many are aware of spousal and survivors benefits, knowledge about eligibility and benefit amounts is relatively low.
  • Respondents are overconfident about how many questions they answer correctly.
  • Individuals who have higher financial literacy, primary earners, and those with greater self-assessed knowledge of Social Security in general have greater objective knowledge of spousal and survivors benefits.
  • Looking at couples where both spouses responded to our survey, we do not find evidence of specialization, defined as one spouse having significantly more knowledge than the other.

Citation

Carman, Katherine G., and Angela A. Hung. 2018. “Social Security Household Benefits: Measuring Program Knowledge,” University of Michigan Retirement Research Center (MRRC) Working Paper, WP 2018-384. Ann Arbor, MI. http://mrdrc.isr.umich.edu/publications/papers/pdf/wp384.pdf

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Project

Paper ID

WP 2018-384

Publication Type

Working Paper

Publication Year

2018