A recent NBER working paper by economists from the Federal Reserve Bank of Atlanta and Boston University suggests that over 90% of Americans could optimize their Social Security benefits by delaying claims until age 70, with over 99% benefiting from waiting past age 65. This detailed study, which incorporated lifespan uncertainty and financial constraints, indicates that current claiming patterns, where only 10.2% wait until 70, leave substantial lifetime benefits on the table, though individual health or lifestyle considerations may justify earlier collection.
A recent NBER working paper by economists Altig, Kotlikoff, and Ye, leveraging the Fiscal Analyzer, suggests that over 90% of Americans could optimize their Social Security benefits by delaying claims until age 70. This detailed study, which incorporated lifespan uncertainty, cash-flow constraints, and federal/state tax and transfer programs, also found that over 99% would benefit from waiting past age 65.
Despite the statistical advantages, only 10.2% of individuals currently wait until age 70 to claim benefits, indicating a significant amount of potential lifetime income is being left on the table. Delaying claims until age 70 can result in benefits 24% higher than if claimed at the Full Retirement Age (FRA) of 67, whereas claiming at age 62 leads to a 30% reduction from the FRA benefit.
While the data strongly supports delayed claiming for most, individual circumstances such as a poor health outlook (not expecting to live past mid-70s) or a higher valuation of immediate lifestyle benefits (e.g., travel) may justify an earlier claim. The optimal age ultimately remains a personal decision, balancing statistical maximization against individual health and financial priorities.
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