Should You Start Social Security at 62, 65, or 70? This Is the Best Age for Most Retirees, According to a Statistical Analysis

A 2022 NBER analysis highlighted in a Nationwide Retirement Institute feature finds that widespread early claiming of Social Security materially reduces lifetime spending power—among households headed by workers aged 45–62 the median loss is estimated at more than $182,000 (in 2022 dollars) if current claiming behavior persists. Last year roughly a quarter of new retired-worker beneficiaries claimed at 62 and nearly half claimed before 66, yet the study’s simulations indicate almost all workers should claim after 65 and more than 90% should wait until age 70 to maximize lifetime benefits. The article notes, however, that individual factors—shorter life expectancy, the need for earlier income, or a preference to retire sooner—can justify earlier claiming, so decisions should be made with financial-advisor input rather than as one-size-fits-all prescriptions.

Analysis

The National Bureau of Economic Research's 2022 study cited in the article estimates that among households headed by workers aged 45–62 current Social Security claiming patterns produce a median loss in lifetime spending power exceeding $182,000 (in 2022 dollars). Last year roughly 25% of new retired-worker beneficiaries claimed at 62 and nearly 50% claimed before 66, yet the NBER simulations indicate almost all in that cohort would maximize lifetime spending power by claiming after 65 and more than 90% by age 70. The article reiterates that claiming before full retirement age (FRA) results in a permanent benefit reduction while delaying past FRA yields a permanent increase, with age 70 delivering the largest monthly payout.

A Nationwide Retirement Institute survey cited finds 40% of respondents incorrectly believe benefits automatically increase after FRA regardless of initial claim age, signaling widespread behavioral misunderstanding. The NBER optimized analysis assumes typical longevity and identifies early claiming as the primary driver of the estimated $182,000 shortfall; avoiding that gap typically requires either living below prior retirement spending between retirement and benefit onset or delaying retirement. The study frames the decision as a trade-off between higher lifetime spending power from deferral and the practical need for earlier income.

For investors and retirement planners these findings imply material implications for retiree cash-flow modeling and product demand: widespread suboptimal claiming practices can create significant income shortfalls and therefore should change assumptions used in planning, advice, and liability stress tests. Financial guidance needs to be individualized around life expectancy and liquidity preferences rather than relying on default early-claiming norms.

Key Decisions for Investors

• Reassess retirement cash-flow models to include claiming-age scenarios at 66 and 70 and quantify the median $182,000 lifetime spending-power impact for households headed by workers aged 45–62
• For clients aged 45–62 with typical longevity, advise considering deferring Social Security toward age 70 where feasible to maximize lifetime spending power
• If clients cannot delay benefits, implement interim funding strategies (targeted savings drawdown or phased retirement) to avoid permanently reducing retirement income
• Prioritize individualized analysis of life expectancy, health status and retirement-timing preferences rather than defaulting to early-claim recommendations
• For product and institutional investors, stress-test liabilities and product demand against behavioral early-claiming patterns and plan for increased need for solutions that bridge income until deferred Social Security begins