Optimal Social Security claiming behavior under lump sum incentive : theory and evidence

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
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.
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Metadaten
Author:Raimond Maurer, Olivia S. Mitchell, Ralph Rogalla, Tatjana Schimetschek
URN:urn:nbn:de:hebis:30:3-427245
URL:https://ssrn.com/abstract=2901376
Parent Title (English):SAFE working paper series ; No. 164
Series (Serial Number):SAFE working paper series (164)
Publisher:SAFE
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Year of Completion:2017
Year of first Publication:2017
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2017/01/31
Tag:annuity; delayed retirement; early retirement; lifetime income; pension; social security
Issue:Version of January 12, 2017
Pagenumber:36
HeBIS PPN:400130297
Institutes:Wirtschaftswissenschaften
House of Finance (HoF)
Center for Financial Studies (CFS)
Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:G11 Portfolio Choice; Investment Decisions
G22 Insurance; Insurance Companies
H55 Social Security and Public Pensions
J26 Retirement; Retirement Policies
J32 Nonwage Labor Costs and Benefits; Private Pensions
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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