Optimal Social Security Claiming Behavior under Lump Sum Incentives: Theory and Evidence Article Swipe
Related Concepts
Lump sum
Annuity
Social security
Payment
Economics
Actuarial science
Incentive
Matching (statistics)
Life annuity
Microeconomics
Mathematics
Pension
Finance
Statistics
Market economy
Raimond Maurer
,
Olivia S. Mitchell
,
Ralph Rogalla
,
Tatjana Schimetschek
·
YOU?
·
· 2017
· Open Access
·
· DOI: https://doi.org/10.3386/w23073
· OA: W2997853408
YOU?
·
· 2017
· Open Access
·
· DOI: https://doi.org/10.3386/w23073
· OA: W2997853408
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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