Around the world, social-security systems are running out of money. And the typical policy recommendations are not very popular, like raising the retirement age, cutting benefits or raising taxes.

A group of researchers sought to think of a new way to get people to delay claiming benefits, work longer and have all that happen without Social Security suffering financially.

In a nutshell, we set out to design a way to give people the benefit increases they would receive if they delayed claiming, but instead of giving them that increase as part of a monthly payment, we would give it to them as a lump sum at their later claiming date. The money turns out to be quite substantial, from $60,000 to $80,000 to $170,000. And lo and behold, people like this idea.

In our experimental survey, we found people would delay claiming benefits for about half a year, and they would work about a third to a half of the extra time. All of that takes place without costing Social Security a penny.

Today, more than a third of Americans claim their benefits from Social Security as early as they can, which is age 62. So most people give up the increased benefits they could get if they waited until the latest possible claiming age, or age 70. It’s a little-known fact that if you wait to claim from age 62 to 70, either by continuing to work or living on other assets, your benefits go up by 76%. This is an enormous increase — and probably a better investment than what most people can make in the market today.

The lure of a lump sum

If you’re someone who would receive $1,500 a month from Social Security at age 62, under our scenario, you still get that $1,500 a month if you claim at, say, age 66. But all the benefit increases you earned by delaying claiming would be given to you as a lump sum at that later claiming date.

What we find is people like lump sums, not surprisingly. A bird in the hand seems worth more than two in the bush.

Not surprisingly, some of the people who are willing to do it owe money. They would still get the basic benefit they’re owed, but the lump sum would help them solve their debt problems. Others who find it very attractive are the financially literate — people who understand that they’re going to get money that would help them cover other expenses, and still get their base benefit for the rest of their lives.

Surprising conclusions

One of the things that really surprised me was that we found that people who otherwise would have claimed young, at 62, were the most likely to be willing to delay claiming. The reason that surprised me is there’s a common view that early retirees can’t work anymore. They’re too sick. They’re unable to find jobs. But, in fact, this suggested there’s a lot of flexibility among early retirees. If you give them an incentive to delay claiming, they will delay, and they’ll work longer.

The follow-up study that we intend to do will vary the amounts that we offer people, not necessarily making it a better deal because the system can’t afford that, but trying to evaluate whether people might take the lump-sum benefit if it were slightly reduced. My sense is it will be popular.

The Social Security shortfall is enormous. Actuaries have estimated that it’s on the order of $28 trillion in present value. That’s twice the size of the gross domestic product of the U.S. So a small delay in claiming won’t solve the problem. We’re also going to have to change the benefit formula. We’re going to have to make changes in the retirement age.

But given that there needs to be a number of different tweaks or adjustments, this could easily be one that makes it more palatable to people. We’re not taking away anything from people; we’re giving them options. I hope that’s more appealing than saying: “You must work another five years.”

Olivia S. Mitchell is an economics professor at the Wharton School of the University of Pennsylvania, where she is the executive director of the Pension Research Council and director of the Boettner Center on Pensions and Retirement Research. She tweets as @OS_Mitchell

This is adapted with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania. Mitchell’s study was published as an issue brief by the Penn Wharton Public Policy Initiative.