Should A Lump-Sum Payment Replace Social Security's Delayed Retirement Credit?

Peter Orszag

Issues in Brief from Center for Retirement Research

Abstract: Transforming Social Security's delayed retirement credit into a lump-sum payment rather than an increased monthly payment would likely encourage more workers to defer retirement and benefit claiming. The idea is thus worthy of further exploration. Several important design issues, however, must be addressed before policymakers give serious consideration to the reform. The most problematic aspect of the proposal is that implementing a lump-sum payment system for individuals older than the normal retirement age may create political pressure to extend this approach to those who are younger than the normal retirement age. Such an extension would risk a significant increase in elderly poverty rates relative to the current Social Security system.

Pages: 12 pages
Date: 2001-04
New Economics Papers: this item is included in nep-lab
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