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Next year, I’ll be turning 70. One of the things I look forward to is getting my first Social Security check. My patience in waiting this long to file for benefits will pay off—literally. My monthly benefit will be 50% larger than it would have been had I claimed at 62.
For most of us, the rewards of filing later far outweigh the risks. Peter Coy, in a November 11, 2024, article in The New York Times, cited a 2022 study that showed 90% of people between 45 and 62 would benefit from waiting until 70 to claim their benefits. Yet only 10% wait that long. The median financial loss for those who claim early is a staggering $182,370.
For many middle-class Americans, that amount of money could be life changing. It might mean becoming debt-free in early retirement, having the means to travel, or enjoying the security of having an extra $7,000 or so in income every year for the rest of their lives.
Instead, most people grab their benefits early, locking in smaller checks for life. Why don’t more people wait longer?
Coy, citing a paper by Suzanne Shu of Cornell and John Payne of Duke, points to human nature. Their research finds that people often see Social Security as something they have already earned, a pot of gold they feel entitled to start spending as soon as possible. The appeal of instant gratification can outweigh the benefits of waiting.
Loss aversion is another big factor. The thought of delaying benefits and then dying before “breaking even” looms large for many people, even though the statistics favor waiting. The average 62-year-old has a 57% chance of living to 78, which is the breakeven point for early claiming. Most will live well beyond that—especially if they reach 70, when life expectancy increases even further.
Of course, not everyone can wait. About 40% of people in their early 60s face health challenges or financial pressures that make early claiming a necessity. But for the majority of retirees who could wait, the math is clear: Social Security rewards patience. If you claim at 62, you lock in 70% of your full benefit for life. By waiting until 67, you receive 100%, and at 70, you’re rewarded with 124%. Over time, those larger checks add up in a way that can profoundly impact your quality of life.
Coy also touches on another crucial point: our system doesn’t make it easy to wait. Social Security nudges people to claim early by reminding them of their eligibility at 62, while doing little to emphasize the long-term advantages of waiting. Small policy changes, like increasing the financial advantage of delaying by just one year, could significantly encourage people to maximize their benefits.
For most Americans, Social Security is the foundation of retirement income, not just a bonus check. Determining when to file is an individual decision, one you make not just for today but for the rest of your life. Waiting until 67 or 70 may not feel like the best choice in the moment. Yet the extra income could mean more freedom from financial stress and more ability to enjoy your later years with peace of mind.
If you are nearing retirement, think carefully and gather the full information you need before you decide when you should claim Social Security. It’s not just about breaking even. It’s about creating the life you deserve as you age—one where $182,000 doesn’t get left on the table but instead becomes the foundation of a more financially secure retirement.
Rick Kahler, MS, CFP®, CFT-I™, CeFT®, CCIM, is the founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.