Optimal social security claiming behavior under lump sum incentives: Theory and evidence

Raimond Maurer, Olivia Mitchell, Ralph Rogalla and Tatjana Schimetschek

No 629, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: Many Americans claim Social Security benefits early, though this leaves them with lower benefits throughout retirement. We build a lifecycle model that closely tracks claiming patterns under current rules, and we use it to predict claiming delays if, by delaying benefits, people received a lump sum instead of an annuity. We predict that current early claimers would defer claiming by a year given actuarially fair lump sums, and the predictions conform with respondents' answers to a strategic survey about the lump sum. In other words, such a reform could provide an avenue for encouraging delayed retirement without benefit cuts or tax increases. Moreover, many people would still defer claiming even for smaller lump sums.

Keywords: retirement; annuity; delayed claiming; pension; early retirement; Social Security (search for similar items in EconPapers)
JEL-codes: G11 G22 H55 J26 J32 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-age, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.econstor.eu/bitstream/10419/205233/1/1680057502.pdf (application/pdf)

Related works:
Journal Article: Optimal social security claiming behavior under lump sum incentives: Theory and evidence (2021)
Working Paper: Optimal Social Security Claiming Behavior under Lump Sum Incentives: Theory and Evidence (2017)
Working Paper: Optimal social security claiming behavior under lump sum incentives: Theory and evidence (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:629

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