Working Paper: NBER ID: w23073
Authors: Raimond Maurer; Olivia S. Mitchell; Ralph Rogalla; Tatjana Schimetschek
Abstract: 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: Social Security; Claiming Behavior; Lump Sum Incentives; Lifecycle Model
JEL Codes: G11; G22; H55; J26; J32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Offering actuarially fair lump sums (G52) | Delay in claiming social security benefits (H55) |
| Delay in claiming social security benefits (H55) | Increase in average claiming age (J26) |
| Offering actuarially fair lump sums (G52) | Increase in average claiming age (J26) |