Academic Research: Usually Better to Claim Later

Another study from the National Bureau of Economic Research provides yet more compelling evidence that most people will be better off waiting to claim their Social Security benefits later, especially married couples.  The report, titled When does it Pay to Delay Social Security? The Impact of Mortality, Interest Rates, and Program Rules, is authored by John Shoven, an economics professor at Stanford University, and Sita Nataraj Slavov, a researcher at the American Enterprise Institute.  From the Abstract:

We find that at real interest rates close to zero, most households – even those

with mortality rates that are twice the average – benefit from some delay, at least for the primary earner.

Essentially, twice the average mortality means they are talking about 75% of households.  Yet in fact, 53% of beneficiaries start benefits right at age 62 and 83% have started before reaching age 66, Full Retirement Age currently.  Therefore, the vast majority of these folks are getting it wrong, and would be far better off claiming later, for some couples, according to the study, adding upwards of $250,000 to their cumulative benefits.

You can follow the link above to the abstract where you can purchase the full study for $5.  Or, for a good overview of the study, Robert Powell, publisher of Retirement Weekly, had this article in yesterday's Wall Street Journal: RETIRING: With Rates Low, it Pays to Delay Social Security.