Optimal social security claiming behavior under lump sum incentives: Theory and evidence
Ralph Rogalla and
No 164, SAFE Working Paper Series from Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt
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)
New Economics Papers: this item is included in nep-age, nep-lma and nep-pbe
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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
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