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

Raimond Maurer, Olivia Mitchell, Ralph Rogalla and Tatjana Schimetschek

No 164, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: People who delay claiming Social Security receive higher lifelong benefits upon retirement. We survey individuals on their willingness to delay claiming later, if they could receive a lump sum in lieu of a higher annuity payment. Using a moment-matching approach, we calibrate a lifecycle model tracking observed claiming patterns under current rules and predict optimal claiming outcomes under the lump sum approach. Our model correctly predicts that early claimers under current rules would delay claiming most when offered actuarially fair lump sums, and for lump sums worth 87% as much, claiming ages would still be higher than at present.

Keywords: Annuity; delayed retirement; lifetime income; 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: 2017, Revised 2017
New Economics Papers: this item is included in nep-age, nep-lma and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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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 (2019)
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:safewp:164

DOI: 10.2139/ssrn.2901376

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