Political  Calculations

Does it pay to delay taking Social Security benefits?

Let's say you're considering one of three options: taking early retirement at Age 62, retiring at the traditional Age 65, or really holding off on retiring until you've reached Age 70. Which choice might be better for you?

The question matters because people who wait longer before drawing Social Security benefits can draw larger benefits than those who don't wait.

To find the answer, we've tapped Social Security's estimate of the maximum possible Social Security benefits that would be paid for individuals choosing to begin receiving payments in the first month after they've reached each of these ages in January 2012.

We then projected the accumulated total amount of benefits each individual would receive all the way out to Age 100.

But since most Americans won't live quite that long, we also projected how much longer a typical American can expect to live once they've reached the age at which they begin receiving Social Security benefits.

We've presented our results in the following chart, where we've used a solid line to indicate the portion of benefits that would be accumulated based upon a typical American's likely remaining life expectancy, and a dashed line to cover the period from that age all the way out to Age 100.

What we find is that based upon the typical life expectancy for most Americans, it does indeed pay to wait longer to draw Social Security benefits after becoming eligible.

For example, an individual who waits until the traditional Age 65 to begin receiving Social Security benefits will accumulate more money from the program than an individual who begins drawing benefits at Age 62 by the time both have reached Age 77. Since most Americans who reach either age can expect to live into their 80s, they would do better to wait than to take early retirement.

Political Calculations

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