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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFS Working Paper Series ; No. 629

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; Insurance; Insurance Companies; Actuarial Studies ; Social Security and Public Pensions ; Retirement; Retirement Policies ; Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
• Subject: retirement ; annuity ; delayed claiming ; pension ; early retirement ; Social Security

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Maurer, Raimond ; Mitchell, Olivia S. ; Rogalla, Ralph ; Schimetschek, Tatjana
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (where): Frankfurt a. M.
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/205233
• URN: urn:nbn:de:hebis:30:3-515311
• Last update: 10.03.2025, 11:44 AM CET