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Should A Lump-Sum Payment Replace Social Security's Delayed Retirement Credit?

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  • Peter Orszag

Abstract

Transforming Social Security's delayed retirement credit into a lump-sum payment rather than an increased monthly payment would likely encourage more workers to defer retirement and benefit claiming. The idea is thus worthy of further exploration. Several important design issues, however, must be addressed before policymakers give serious consideration to the reform. The most problematic aspect of the proposal is that implementing a lump-sum payment system for individuals older than the normal retirement age may create political pressure to extend this approach to those who are younger than the normal retirement age. Such an extension would risk a significant increase in elderly poverty rates relative to the current Social Security system.

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  • Peter Orszag, 2001. "Should A Lump-Sum Payment Replace Social Security's Delayed Retirement Credit?," Issues in Brief ib-6, Center for Retirement Research.
    • Handle: RePEc:crr:issbrf:ib-6
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    File URL: http://crr.bc.edu/briefs/should-a-lump-sum-payment-replace-social-securitys-delayed-retirement-credit/
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    1. Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March.
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    Cited by:

    1. Raimond Maurer & Olivia S. Mitchell & Ralph Rogalla & Tatjana Schimetschek, 2014. "Will They Take the Money and Work? An Empirical Analysis of People's Willingness to Delay Claiming Social Security Benefits for a Lump Sum," NBER Working Papers 20614, National Bureau of Economic Research, Inc.
    2. Sita Nataraj Slavov & Aspen Gorry, 2012. "Financing entitlements and promoting work: Does policy encourage early retirement?," AEI Economic Perspectives, American Enterprise Institute, December.

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