Speaker(s): Ralph Rogalla (St. Johns University)
People who delay claiming Social Security receive higher lifelong benefits upon retirement. We survey individuals about their willingness to delay claiming if they were able to receive a lump sum in lieu of a higher annuity payment. Using a moment-matching approach, we calibrate a lifecycle model tracking observed claiming patterns under current rules and predict optimal claiming outcomes under the lump sum approach. Our model correctly predicts that early claimers under current rules would delay claiming most when offered actuarially fair lump sums, and for lump sums worth 87% as much, claiming ages would still be higher than at present.
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