NCPA - National Center for Policy Analysis

EVEN WITH SHORTER LIFE EXPECTANCY, DEFERRING BENEFITS IS A GOOD BET

April 24, 2009

Would it be wise for black men to start drawing their Social Security benefit at age 62, asks Scott Burns, a business columnist with the Dallas Morning News? 

According to the U.S. Life Tables, black men have a significant life expectancy disadvantage at any age when compared to white men, white women or black women.  For instance:

  • At 62, a black man has an expectancy of 16.9 years.
  • That's 2.4 years, or 12.4 percent, less than the 19.3-year life expectancy of a white man at that age.

But the news isn't all bad, says Burns.  First, the longer you live, the smaller the expectancy gap in both years and percent:

  • By age 70, for instance, a black man can expect to live an additional 12.4 years.
  • That's 1.3 years, or 9.5 percent less than the 13.7-year expectancy of a white man at that age.

Second, even though their life expectancy is lower than others, it is still long enough that they can benefit from deferring Social Security benefits; the benefit gain isn't as much of a slam-dunk as it is for, say, white women, but as long as your life expectancy is equal to, or greater than, the 12- to 13-year payback period, they will increase their lifetime income, says Burns:

  • At 62 with a 16.9-year life expectancy, deferral is a good bet.
  • At 66 with a 14.6-year expectancy, it's still a good bet because they're likely to exceed the payback period by about two years.
  • Only at age 70, with a 12.4-year expectancy, does it become an even bet.

Any decision, of course, will always be a gamble, says Burns, but if deferring Social Security benefits were a table game in a casino, it would be one of the better games to play because you've got a good chance of "beating the house."

Source: Scott Burns, "Even with shorter life expectancy, deferring benefits is a good bet," Dallas Morning News, April 23, 2009.

 

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