Delay Social Security Claiming

September 13, 2013

John B. Shoven and Sita Nataraj Slavov, researchers for National Bureau of Economic Research, show that claiming Social Security benefits at a later age increases the present value of lifetime benefits for most individuals.

Social Security retirement benefits can be claimed at any age between 62 and 70 years old, with delayed claiming resulting in larger monthly payments. (An individual who claims later is likely to receive benefits for a shorter period.)

A number of benefit rule changes in the 1990s and early 2000s have contributed to the attractiveness of delaying Social Security.

  • Most of the increase in the gains from delay come from historically low interest rates and improved mortality.
  • Also, since 2000, one-earner couples have benefited from a provision known as "file and suspend," which allows the non-earner to claim a spousal benefit even if the primary earner delays his/her own worker benefit.

Shoven and Slavov find that individuals born in 1938 and later -- who face more generous terms for delaying Social Security -- are more likely to delay claiming. However, even among this younger group, the vast majority do not appear to delay optimally.

Source: John B. Shoven and Sita Nataraj Slavov, "Recent Changes In The Gains From Delaying Social Security," National Bureau of Economic Research, August 2013.

 

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