Exchanging Delayed Social Security Benefits for Lump Sums: Could this Incentivize Longer Work Careers?
31 Pages Posted: 11 May 2013 Last revised: 3 Jul 2023
There are 2 versions of this paper
Exchanging Delayed Social Security Benefits for Lump Sums: Could this Incentivize Longer Work Careers?
Date Written: May 2013
Abstract
Social Security benefits are currently provided as a lifelong benefit stream, though some workers would be willing to trade a portion of their annuity streams in exchange for a lump sum amount. This paper explores whether allowing people to receive a lump sum as a payment for delayed retirement rather than as an addition to their lifetime Social Security benefits might induce them to work longer. We model the factors that influence how people trade off a Social Security stream for a lump sum, and we also examine the consequences of such tradeoffs for work, retirement, and life cycle wellbeing. Our base case indicates that workers given the chance to receive their delayed retirement credit as a lump sum payment would boost their average retirement age by 1.5-2 years. This will interest policymakers seeking to reform the Social Security system without raising costs or cutting benefits, while enhancing the incentives to delay retirement.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Financial Literacy and Planning: Implications for Retirement Wellbeing
-
Baby Boomer Retirement Security: The Roles of Planning, Financial Literacy, and Housing Wealth
-
Baby Boomer Retirement Security: The Roles of Planning, Financial Literacy, and Housing Wealth
-
Implications for Retirement Wellbeing of Financial Literacy and Planning
-
Wealth Accumulation and the Propensity to Plan
By John Ameriks, Andrew Caplin, ...
-
Financial Literacy and Stock Market Participation
By Maarten van Rooij, Annamaria Lusardi, ...
-
Financial Literacy and Stock Market Participation
By Maarten van Rooij, Annamaria Lusardi, ...
-
Financial Literacy and Stock Market Participation
By Maarten van Rooij, Annamaria Lusardi, ...