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

SAFE Working Paper No. 84

42 Pages Posted: 21 Feb 2015

See all articles by Raimond Maurer

Raimond Maurer

Goethe University Frankfurt

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Ralph Rogalla

St. John's University - Tobin College of Business - School of Risk Management, Insurance, and Actuarial Science; Goethe University Frankfurt - Department of Finance

Tatjana Schimetschek

Goethe University Frankfurt - Department of Finance

Multiple version iconThere are 3 versions of this paper

Date Written: February 20, 2015

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: Annuity, lump sum, Social Security, delayed retirement, lifetime income, pension

JEL Classification: D04, D01, D12, D14, G22, H55

Suggested Citation

Maurer, Raimond and Mitchell, Olivia S. and Rogalla, Ralph and Schimetschek, Tatjana, Will They Take the Money and Work? An Empirical Analysis of People's Willingness to Delay Claiming Social Security Benefits for a Lump Sum (February 20, 2015). SAFE Working Paper No. 84. Available at SSRN: https://ssrn.com/abstract=2567341 or http://dx.doi.org/10.2139/ssrn.2567341

Raimond Maurer (Contact Author)

Goethe University Frankfurt ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

Olivia S. Mitchell

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ralph Rogalla

St. John's University - Tobin College of Business - School of Risk Management, Insurance, and Actuarial Science ( email )

101 Astor Place
New York, NY 10003
United States

Goethe University Frankfurt - Department of Finance ( email )

House of Finance
Grueneburgplatz 1
Frankfurt am Main, Hessen 60323
Germany

Tatjana Schimetschek

Goethe University Frankfurt - Department of Finance ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt, 60629
Germany

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