Incentivizing Delayed Claiming of Social Security Retirement Benefits Before Reaching the Full Retirement Age

Social Security Bulletin, 74(4): 21-43, 2014

23 Pages Posted: 9 Nov 2014 Last revised: 28 Dec 2017

See all articles by Melissa Knoll

Melissa Knoll

Social Security Administration - Office of Retirement Policy

Anya Olsen

Government of the United States of America - Social Security Administration - Office of Retirement Policy

Date Written: November 11, 2014

Abstract

Claiming Social Security retirement benefits before the full retirement age (FRA) results in permanently lower benefits. Therefore, delaying claiming is often considered the best decision economically. We examine a number of novel changes aimed at encouraging individuals to delay claiming in the months and years before reaching their FRA, such as changing the early retirement reductions, paying lump sums, rewarding work with bonuses, instituting a lottery, and reforming the earnings test. We use Modeling Income in the Near Term, Version 6 data to determine the socioeconomic characteristics of individuals who claim at various ages and analyze one of the incentives to encourage delayed claiming: changing the early retirement reductions. We model the incentive first with no assumed behavioral response, and then we assume a 1-year delay in benefit claiming. We find that the delay in claiming would result in larger increases to both monthly and lifetime benefits than would the incentive alone.

Keywords: Social Security, simulation, older workers, intertemporal consumer choice, sociodemographic, education, income, poverty measurement

JEL Classification: C15, D91, H55, I24, I32, J11, J14

Suggested Citation

Knoll, Melissa and Olsen, Anya, Incentivizing Delayed Claiming of Social Security Retirement Benefits Before Reaching the Full Retirement Age (November 11, 2014). Social Security Bulletin, 74(4): 21-43, 2014, Available at SSRN: https://ssrn.com/abstract=2520547

Melissa Knoll (Contact Author)

Social Security Administration - Office of Retirement Policy ( email )

Washington, DC 20254
United States

Anya Olsen

Government of the United States of America - Social Security Administration - Office of Retirement Policy ( email )

500 E Street, SW
Washington, DC 20254
United States

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