Optimal social security claiming behavior under Lump Sum incentives: theory and evidence

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 
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.
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Author:Raimond Maurer, Olivia S. Mitchell, Ralph Rogalla, Tatjana Schimetschek
URN:urn:nbn:de:hebis:30:3-515311
URL:https://ssrn.com/abstract=3476315
Parent Title (English):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 629
Series (Serial Number):CFS working paper series (629)
Publisher:Center for Financial Studies
Place of publication:Frankfurt, M.
Document Type:Working Paper
Language:English
Year of Completion:2019
Year of first Publication:2019
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2019/10/28
Tag:Retirement; Social Security; annuity; delayed claiming; early retirement; pension
Issue:May 4, 2019
Pagenumber:39
Note:
©2019 Maurer, Mitchell, Rogalla, & Schimetschek. All rights reserved.
HeBIS PPN:455257590
Institutes:Wirtschaftswissenschaften
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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