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late claiming of benefits by those that hold relatively largeprivate pension assets. This is also defended by the sameresearcher along with others in a recent U.S. News andWorld Report article, February 11, 2008.17Notice (and this is true in all the tables) that a givenindividual only appears in one of the cells identified by ageand year, and that corresponds to the first time they applyfor benefits.18In principle, we cannot rule out possible period effectsresulting from at least two aspects. First, the focal point ofthe year 2000 as the arrival of the new millennium couldhave lead some individuals to postpone their retirement(claiming of benefits) until this milestone date. Second, thenew decade came with the burst of the technology bubbleand a slowdown in job growth after the robust growth of thelate 1990s; this change in trend could have prompted someindividuals consider retirement as their expectations offuture income growth became less optimistic.19See also Gustman and Steinmeier (2004), Song (2004),and French (2005) for discussions of the likely consequencesof the removal of the earnings test.20We thank an anonymous referee for making this pointto us.21To truly compare these benefit levels we have to takeinto account the adjustments to their PIA so that the dollaramounts by column and rows are in the same actuarialunits. The idea is that although a person who claims atage 62 will mechanically have a lower monthly benefit thana person who claims at age 65 yet has the same earningshistory, the early claimer receives 3 more years of benefitsand therefore is in present value at the actuarial adjustmentfactor, and assuming that they will live to the same age,their benefit levels are actuarially equivalent.22This means that if individuals were randomly assignedto claiming at a given age between say age 62 and age 70,and without the existence of any policy changes in thisperiod, the benefit levels (on average) in a given year for thedifferent ages should be identical, and the differences overtime could only be explained by time effects (macro effectsbut not related to Social Security reforms) or cohort effects.23These tables show the actual PIAs for the same groupof individuals as shown in Table 3, and therefore both setsof numbers can be directly compared. It is clear that ourapproximation is quite close to the PIA of record, and thedifferences can be traced back, as explained earlier, to thetiming of claiming we have assumed and the role of theearnings test. Notice, that the main results of our analysisare essentially unchanged.24More recently Haveman and others (2006) analyzewhether early retirees will be able to maintain their wellbeingduring retirement. Given the data they use, little isdiscussed regarding level of benefits, and they do not compareearly claimers with those that delay claiming benefits.25It is still true, however, that especially for long-livedearly retirees and their survivors and low-income earlyretirees, the reduction can have real welfare consequences,even if for the average individual they are not of first orderimportance.26The fact that the proportion of individuals claimingbenefits changed considerably in the year that the earningstest was eliminated for those above the FRA and that thecomposition of claimers in the post-2000 period seemed tohave significantly changed for those claiming after age 65 ishowever a bit puzzling in light of the discussion of Benítez-Silva and Heiland (2008), where the authors clearly showthat the real incentives of the earnings test are very closeto being actuarially fair given the adjustment of benefits atthe FRA if benefits were withheld. These large shifts suggest,as discussed by Benítez-Silva and Heiland (2007), alikely lack of knowledge about this important aspect of theearnings test provision. Those authors estimate that onlyaround 40 percent of individuals are aware of this aspectof the rules that govern the earnings test. In recent workusing telephone surveys on individuals’ knowledge of theSocial Security retirement system Benítez-Silva, Demiralp,and Liu (2009) show that a majority of Americans do notseem to be aware of even some of the basic features of thesystem.27This group can also potentially include individualswho do not need the benefit yet for a variety of reasons(access to private pensions or other sources of income) andconsider the DRC a fair rate of return. Notice that additionalwork can lead to a recomputation of benefits, whichcan only be an advantage to individuals regardless of theireconomic circumstances.28Unfortunately, the public-use microdata file does notprovide any additional characteristics of individuals.ReferencesBaker, Michael, and Dwayne Benjamin. 1999. How doretirement tests affect the labour supply of older men?Journal of Public Economics 71(1): 27–51.Benítez-Silva, Hugo, and Debra S. Dwyer. 2006. Expectationformation of older married couples and the rationalexpectations hypothesis. Labour Economics 13(2):191–218.Benítez-Silva, Hugo, Debra S. Dwyer, Frank Heiland,and Warren C. Sanderson. 2009. Retirement and SocialSecurity reform expectations: A solution to the new earlyretirement puzzle. Forthcoming.Benítez-Silva, Hugo, and Frank Heiland. 2007. The SocialSecurity earnings test and work incentives. Journal ofPolicy Analysis and Management 26(3): 527–555.———. 2008. Early claiming of Social Security benefitsand labor supply behavior of older Americans. AppliedEconomics 40(23): 2969–2985.Social Security Bulletin • Vol. 69 • No. 3 • 2009 93