Economics of Macro Issues 7th Edition by Roger LeRoy Miller,Daniel Benjamin

Exercise 5

For each year after full retirement age that a person delays collecting Social Security benefits, the annual benefits are raised by 8 percent. (This "bump" in benefits ceases at age seventy. Additional retirement delays do not cause benefits to rise any further.) How is the incentive to retire before age seventy affected by this provision for benefit increments, relative to a system in which benefits were not raised in this manner? Explain.