DH and I retired in 2001 at about age 48. We live a modest, LBYM lifestyle and don’t need Social Security to make ends meet. When DH approached age 62, I read " Get What’s Yours: The Secrets to Maxing Out Your Social Security," by Kotlikoff et al.
Professor Kotlikoff’s mother lived to age 100 so he adamantly endorses waiting until age 70 to begin Social Security. I ran a spreadsheet for DH and myself. Obviously, a beneficiary who begins SS at age 62 will get 8 additional years of payments than one who waits until age 70. For many, the math favors starting to take Social Security benefits at 70, when monthly benefits before cost-of-living adjustments are 76% higher than at 62. The actual numbers for each recipient are available at www.ssa.gov where we each have a MySocialSecurity account.
Our break-even age was 87. For a 60 year old American male, median age at death is 82.5 years. For a 60 year old American female, median age at death is 86 years. However, DH is a long-time smoker with moderate COPD and a statistical life span of 78 years (based on his smoking and health) and I am a breast cancer survivor with two parents who died around age 70. It’s highly unlikely that we will survive to our break-even age. We started Social Security at age 62.
Many Americans are deciding to take early Social Security for various reasons.
Fear Over Social Security’s Future Leads Some to Claim Retirement Benefits Early
Filing for benefits before full retirement age is a gamble, say economists and financial advisers
By Anne Tergesen, The Wall Street Journal, March 10, 2023
Some Americans are claiming Social Security years before full retirement age out of fear their benefits will be cut once the program runs short on cash.
They say they want to get as much in benefits as they can before 2034. That is when the retirement program is projected to deplete its reserves, triggering a 23% reduction in benefits, unless Congress acts. …
It is unclear how many retirees take Social Security early because of anxiety over its finances, though a quarter of men and 27% of women filed for benefits in 2021 when they turned the minimum claiming age of 62…
Benefits have been cut before. When Congress passed bipartisan legislation in 1983 to bolster the program’s finances, it delayed Social Security’s annual cost-of-living increase by six months and began taxing a portion of benefits for recipients with higher incomes… [end quote]
I expect that future efforts to strengthen Social Security will include higher taxes (until it’s all taxed away) and possibly even a means test on beneficiaries. Raising taxes is more politically palatable than cutting benefits. Not to mention higher taxes on workers.
The timing of Social Security has Macro impact because every payment is a fiscal stimulus for the economy. Many recipients live on their Social Security and spend it right away. If the giant wave of retiring Baby Boomers begins SS early the economy will be stimulated early. Delaying payments will delay economic stimulus.