Reconsidering the Social Security Notch and retirement: Wealth and incentive effects

•First to use modern research design to study Social Security “Notch” on retirement.•Explains why Krueger and Pishcke (1992) found limited impact of “Notch” on retirement.•Shows that the “Notch” produced large offsetting wealth and incentive effects.

Using the Health and Retirement Study, we show that studies using the Social Security Notch cannot separately identify the effects of retirement wealth and forward-looking incentives on retirement because the Notch natural experiment changed both factors in offsetting ways.