Working Paper: NBER ID: w20614
Authors: Raimond Maurer; Olivia S. Mitchell; Ralph Rogalla; Tatjana Schimetschek
Abstract: This paper investigates whether exchanging the Social Security delayed retirement credit (currently paid as an increase in lifetime annuity benefits) for a lump sum would induce later claiming and additional work. We show that people would voluntarily claim about half a year later if the lump sum were paid for claiming any time after the Early Retirement Age, and about two-thirds of a year later if the lump sum were paid only for those claiming after their Full Retirement Age. Overall, people will work one-third to one-half of the additional months, compared to the status quo. Those who would currently claim at the youngest ages are likely to be most responsive to the offer of a lump sum benefit.
Keywords: Social Security; Lump Sum; Delayed Retirement; Claiming Behavior
JEL Codes: D04; D1; D12; D14; G22; H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lump sum offer (J33) | delay in claiming social security benefits (H55) |
| delay in claiming social security benefits (H55) | additional work months (J22) |
| age, sex, marital status, education, subjective life expectancy (J17) | delay in claiming social security benefits (H55) |
| financial literacy and trust in retirement program's sustainability (G53) | delay in claiming social security benefits (H55) |