Skip to main content

Does it pay to delay social security?*


Social Security benefits may be commenced at any time between ages 62 and 70. As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit to reflect the age at which benefits are claimed. We investigate the actuarial fairness of that adjustment in light of recent improvements in mortality and historically low interest rates. We show that delaying is actuarially advantageous for a large number of people, even for individuals with mortality rates that are twice the average. At real interest rates closer to their historical average, singles with mortality that is substantially greater than average do not benefit from delay, although primary earners with high mortality can still improve the present value of the household's benefits through delay. We also investigate the extent to which the actuarial advantage of delay has grown since the early 1960s, when the choice of when to claim first became available, and we decompose this growth into three effects: (1) the effect of changes in Social Security's rules, (2) the effect of changes in the real interest rate, and (3) the effect of changes in life expectancy. Finally, we quantify the extent to which the gains from delay can be expected to increase in the future as a result of mortality improvements.

Hide All

This research was supported by the U.S. Social Security Administration through grant number 5RRC08098400-04-00 to the National Bureau of Economic Research (NBER) as part of the SSA Retirement Research Consortium, and by the Sloan Foundation through grant number 2011-10-18 to Stanford University. The findings and conclusions expressed are solely those of the authors and do not represent the views of SSA, any agency of the Federal Government, the Sloan Foundation, or the NBER. The authors are grateful to Phoebe Yu for outstanding research assistance; to Jim Poterba, Jason Scott, David Weaver, participants at the 14th Annual Retirement Research Consortium Conference, and two anonymous referees for helpful discussion and comments; and to Steve Goss, Michael Morris, and Alice Wade of the Social Security Administration for providing the cohort life tables used in this paper. The first author is a member of the board of directors of Financial Engines, a NASDAQ-listed company which assists individuals with retirement planning. Financial Engines provided no financial support for this research. The authors are doing related research that is also supported by a Social Security Administration grant to the NBER as part of the SSA Retirement Research Consortium. The views and approaches in this paper are solely those of the authors. This paper is based on two earlier working papers: ‘The Decision to Delay Social Security: Theory and Evidence’ (NBER Working Paper no. 17866) and ‘When Does it Pay to Delay Social Security? The Impact of Mortality, Interest Rates, and Program Rules’ (NBER Working Paper no. 18210).

Hide All
Arias Elizabeth, Rostron Brian L., and Tejada-Vera Betzaida (2010) United States Life Tables, 2005. National Vital Statistics Reports, 58(10).
Ball Robert M. (1972) Social security amendments of 1972: summary and legislative history. Social Security Bulletin, 36(3): 325.
Beauchamp Andrew and Wagner Mathis (2012) Dying to Retire: Adverse Selection and Welfare in Social Security. Unpublished manuscript.
Blahous Charles (2010) Social Security: The Unfinished Work. Stanford: Hoover Institution Press.
Brown Jeffrey R., Liebman Jeffrey B., and Pollet Joshua (2002) Estimating Life Tables that reflect socioeconomic differences in mortality. In Feldstein Martin and Liebman Jeffrey B. (eds), The Distributional Aspects of Social Security and Social Security Reform. Chicago: University of Chicago Press.
Brown Jeffrey R. (2007) Rational and Behavioral Perspectives on the Role of Annuities in Retirement Planning. Working Paper 13537. Cambridge: National Bureau of Economic Research.
Brown Jeffrey R., Casey Marcus D., and Mitchell Olivia S. (2007) Who Values the Social Security Annuity? New Evidence on the Annuity Puzzle. Working Paper NB07-02. Cambridge: National Bureau of Economic Research.
Brown Jeffrey R. (2008) Financial Education and Annuities. Consultant Report. Paris: OECD.
Brown Jeffrey, Arie Kapteyn R., and Mitchell Olivia (2011) Framing effects and expected social security claiming behavior.Working Paper 17018. Cambridge: National Bureau of Economic Research.
Butler Monika and Teppa Federica (2007) The Choice Between an Annuity and a Lump Sum: Results from Swiss Pension Funds. Journal of Public Economics, 91(10): 19441966.
Chai Jingjing, Maurer Raimond, Mitchell Olivia S., and Rogalla Ralph (2013) Exchanging delayed social security benefits for lump sums: could this incentivize longer working careers? Working Paper 19032. Cambridge: National Bureau of Economic Research.
Cohen Wilbur J. and Mitchell Willam L. (1961) Social security amendments of 1961: summary and legislative history. Social Security Bulletin, 24(9): 333.
Coile Courtney, Diamond Peter, Gruber Jonathan and Jousten Alain (2002) Delays in claiming social security benefits. Journal of Public Economics, 84(3): 357385.
Hurd Michael D., Smith James P. and Zissimopoulos Julie M. (2004) The effects of subjective survival on retirement and social security claiming. Journal of Applied Econometrics, 19(6): 761775.
Jivan Natalia A (2004) How Can the Actuarial Reduction for Social Security Be Right? Just the Facts 11, Center for Retirement Research. Chestnut Hill: Boston College.
Kotlikoff Laurence (2012) 42 Social Security ‘Secrets’ All Baby Boomers and Millions of Current Recipients Need to Know – Revised! Forbes July 3. Available online at
Liebman Jeffrey B. and Luttmer Erzo F.P. (2011) Would People Behave Differently If They Better Understood Social Security? Evidence From a Field Experiment. Unpublished Manuscript.
Mahaney James I. and Carlson Peter C. (2007) Rethinking social security claiming in a 401(k) world. Working Paper 2007–18. Philadelphia: Pension Research Council.
Meyer William and Reichenstein William (2010) Social security: when to start benefits and how to minimize longevity risk. Journal of Financial Planning, 23(3): 4959.
Mitchell Olivia S., Poterba James M., Warshawsky Mark J., and Brown Jeffrey R. (1999) New Evidence on the Money's Worth of Individual Annuities. The American Economic Review, 89(5): 12991318.
Munnell Alicia H. and Soto Mauricio (2005) Why Do Women Claim Social Security Benefits So Early? Issue Brief 35 Center for Retirement Research. Chestnut Hill: Boston College.
Munnell Alicia H., Golub-Sass Alex and Karamcheva Nadia, (2009) Strange but True: Claim Social Security Now, Claim More Later. Issue Brief 9–9, Center for Retirement Research. Chestnut Hill: Boston College.
Munnell Alicia H. and Sass Steven A. (2012) Can the Actuarial Reduction for Social Security Early Retirement Still be Right? Issue Brief 12–6, Center for Retirement Research. Chestnut Hill: Boston College.
Orszag Peter (2001) Should a Lump-Sum Payment Replace Social Security's Delayed Retirement Credit? Issue in Brief 6, Center for Retirement Research. Chestnut Hill: Boston College.
Sass Steven A., Sun Wei, and Webb Anthony (2007) Why do men claim social security so early: ignorance or caddishness? Working Paper 2007–17, Center for Retirement Research. Chestnut Hill: Boston College.
Sass Steven A., Sun Wei, and Webb Anthony (2013) Social security claiming decision of married men and widow poverty. Economics Letters, 119(1): 2023.
Schottland Charles I (1956) Social security amendments of 1956: a summary and legislative history. Social Security Bulletin, 19(9): 331.
Society of Actuaries (2000) The RP-2000 Mortality Tables. Available online at
Sun Wei and Webb Anthony (2009) How much do households really lose by claiming social security at age 62? Unpublished Manuscript.
Shuart Amy N., Weaver David A., and Whitman Kevin (2010) Widowed before retirement: social security benefits claiming strategies. Journal of Financial Planning, 23(4): 4553.
Weaver David A. (2002) The widow(er)'s limit provision of social security. Social Security Bulletin, 64(1): 115.
Yaari Menahem E. (1965) Uncertain Lifetime, Life Insurance, and the Theory of the Consumer. The Review of Economic Studies, 32(2): 137150.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Pension Economics & Finance
  • ISSN: 1474-7472
  • EISSN: 1475-3022
  • URL: /core/journals/journal-of-pension-economics-and-finance
Please enter your name
Please enter a valid email address
Who would you like to send this to? *



Altmetric attention score

Full text views

Total number of HTML views: 4
Total number of PDF views: 38 *
Loading metrics...

Abstract views

Total abstract views: 324 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 24th November 2017. This data will be updated every 24 hours.