Will They Take the Money and Work? An Empirical Analysis of People’s Willingness to Delay Claiming Social Security Benefits for a Lump Sum

Journal of Risk and Insurance, Vol. 85, Issue 4, pp. 877-909

Raimond Maurer,
Olivia S. Mitchell,
Ralph Rogalla,
Tatjana Schimetschek
Research Area:
Household Finance
Dec 2018
Annuity, lump sum, Social Security, delayed retirement, lifetime income, pension

This article investigates whether exchanging Social Security delayed retirement credits, currently paid as increases in lifelong benefits, for a lump sum would induce later claiming and additional work. We show that people would voluntarily claim about 6 months later if the lump sum were paid for claiming after the early retirement age, and about 8 months 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. Those who would currently claim at the youngest ages are most responsive to the lump sum offer.

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