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Key Findings Details

Will They Take the Money and Work? An Empirical Analysis of People’s Willingness to Delay Claiming Social Security Benefits for a Lump Sum
Raimond H. Maurer, Olivia S. Mitchell, Ralph Rogalla and Tatjana Schimetschek
WP 2014-308

  • Our research asks whether replacing Social Security’s annuitized delayed retirement credit with a lump sum payment would potentially induce people to claim benefits later and work longer.
  • Using an experimental module in the American Life Panel, we show that:
    • people would voluntarily work longer if they were offered an actuarially fair lump sum instead of the delayed retirement credit under the current system, and
    • people would voluntarily work between one-quarter and half of the additional time until claiming.

  • The claiming delay would average half a year if the lump sum were paid for claiming later than age 62, and about two-thirds of a year if the lump sum were paid only for claiming after the Full Retirement Age.
  • Individuals who respond most to the lump sum incentives are those who would have claimed earliest, under the current rules.

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