89.8% of Americans make this Social Security mistake

1. The study that should change how Americans think about claiming

In November 2022, three economists — David Altig of the Federal Reserve Bank of Atlanta, Laurence Kotlikoff of Boston University, and Victor Yifan Ye — published a working paper at the National Bureau of Economic Research with a question for a title: “How Much Lifetime Social Security Benefits Are Americans Leaving on the Table?”

The answer they produced is one of the cleanest findings in modern retirement research. Using data from the 2018 American Community Survey and the 2019 Survey of Consumer Finance, running each household through a life-cycle consumption-smoothing model called The Fiscal Analyzer, they reached three conclusions that should change how this decision is discussed.

First: virtually all American workers aged 45 to 62 should wait beyond age 65 to claim Social Security. Not “some.” Not “most.” Virtually all. The math, applied across the actual distribution of household incomes, ages, and circumstances, points overwhelmingly in one direction.

Second: more than 90% should wait until age 70. Age 70 is the point at which delayed retirement credits stop accruing. For the great majority of households, claiming earlier than 70 produces a lower lifetime spending result than waiting.

Third: only 10.2% of Americans actually wait until 70. The other 89.8% claim earlier than the financially optimal age for their situation. And the cost of that early claiming, expressed as the present value of household lifetime discretionary spending forgone, has a median of $182,370 per household.

That figure deserves a second reading. The median household leaves $182,370 in lifetime spending on the table by claiming Social Security earlier than the math says they should. For one in four households, the loss exceeds 17% of lifetime spending. For one in ten, it exceeds 26%. Among the lowest-income fifth of workers, the loss as a percentage of lifetime spending is actually larger than for higher-income workers — because low-income retirees depend more heavily on Social Security for their retirement income, so the early-claim penalty hits them harder.

The NBER paper is not the only research pointing this direction — a 2019 study from United Income, using a separate dataset and methodology, reached similar conclusions, finding that only 4% of retirees claim at the optimal age and the average household loses $111,000. The NBER analysis is more recent and more comprehensive, but the direction of the finding is the same in every serious study of the question. The American claiming behavior is dramatically suboptimal, and the cost is large.

2. Why “claim at 62” is the wrong default for almost everyone

Despite the math, claiming at 62 — the earliest age Social Security allows — has been the dominant pattern for decades. In 2024, nearly one-quarter of new retired-worker beneficiaries claimed at age 62, and nearly half claimed before age 66. Only about 10% waited until 70.

That pattern persists in the face of clear research because of a combination of behavioral and informational factors that systematically push people toward early claiming. Three big ones:

1. The “lock it in” instinct. Many early claimers say they want to grab benefits while they can — either because they fear the program will fail (a concern addressed by the 2025 Trustees Report, which projects continued payment of 77% of scheduled benefits even after trust fund depletion in 2033, covered in the Social Security trust fund article), or because they fear they personally won’t live long enough to benefit from delay. Both concerns are mathematically smaller than the cost of early claiming for most healthy retirees.

2. The visible-immediate vs. invisible-future trade-off. Receiving $1,750 a month starting at 62 is concrete and immediate. Receiving $3,100 a month starting at 70 is abstract and eight years away. Human psychology systematically over-weights the immediate option, even when the delayed option produces dramatically more lifetime income. Behavioral economists call this hyperbolic discounting; it shows up across almost every domain where short-term and long-term outcomes conflict.

3. The cash-bridge problem. For workers who retire at 62 with no pension and limited savings, claiming Social Security immediately isn’t a financial planning choice — it’s a necessity. They need the income to live on. Without a pension, a TSP or 401(k) balance large enough to fund the gap, or other bridge income, delaying isn’t an option. This is the legitimate case for early claiming, and it applies to a real share of retirees — but it doesn’t apply to the millions of workers who do have other resources but still claim at 62 out of habit or misunderstanding.

The most important fact about claiming behavior is that the dominant pattern (claim at 62) and the optimal pattern (claim at 70 for most) are almost exactly opposite. The default is wrong for the majority.

The American claiming behavior is dramatically suboptimal, and the cost is large. The median household leaves $182,370 in lifetime spending on the table by claiming Social Security earlier than the math says they should. For one in ten households, the loss exceeds 26% of lifetime spending.

3. The actual math: what each year of delay buys you

To understand why delaying is so valuable, walk through what each year of delay actually does to your monthly benefit. Social Security calculates your benefit relative to your full retirement age (FRA, which is 67 for anyone born in 1960 or later). The adjustments:

The mechanics: from age 62 to FRA, each year of delay raises your benefit by approximately 6–7%. From FRA to 70, each year of delay raises your benefit by exactly 8%, paid as delayed retirement credits. After 70, delayed credits stop accumulating — there is no benefit to delaying past 70.

The claim-at-62 vs. claim-at-70 comparison is the clearest demonstration of the math. For someone born in 1960 or later:

• Claiming at 62 produces a monthly benefit equal to 70% of FRA
• Claiming at 70 produces a monthly benefit equal to 124% of FRA
• The ratio: 124 ÷ 70 = 1.77 — a 77% larger monthly check by waiting from 62 to 70

For a worker with an FRA benefit of $2,500 per month:

Over a 20-year retirement, the cumulative difference is $324,000. Over 25 years, $405,000. Add cost-of-living adjustments — which compound on the larger base for the delayed claimer — and the gap widens further. Add survivor benefits — the higher of the two spouses’ benefits flows to the survivor at the other’s death, so delayed retirement credits effectively follow into the survivor benefit — and the cumulative household impact gets larger still.

The math is decisive. The behavioral pattern is not.

4. Why most people claim early anyway

If the math is so clear, why does the dominant pattern run the other direction? Six specific factors push people toward early claiming, even when they would be better off waiting.

1. Anchoring on age 62. It’s the earliest possible claiming age, so it becomes a salient anchor point. Workers approach 62 thinking about whether they “can” claim, rather than whether they “should.” The framing is wrong — the question isn’t whether you’re eligible, it’s whether claiming now versus later produces a better lifetime outcome.

2. Misunderstanding of life expectancy. A 65-year-old American in average health today has a 50% chance of living past 84 (men) or 87 (women). Most retirees underestimate their own life expectancy by 5–10 years, often anchoring on outdated figures or on the average age of death (which includes people who died young). The actual question isn’t “average life expectancy” but “conditional life expectancy given you’ve already reached 62 or 65” — which is meaningfully higher than headline numbers suggest.

3. The “die before break-even” fear. A common argument: “What if I wait until 70 to claim, and then die at 72? I’d have lost all those years of benefits.” The fear is real but the math is wrong. The break-even age for claiming at 62 versus 70 — the age at which cumulative delayed-claim benefits exceed cumulative early-claim benefits — is around 80–82 for most retirees. A 65-year-old in average health has more than a 75% chance of reaching 82, and the survivor benefit math means even retirees who die before break-even often produce a household lifetime gain by delaying (because the surviving spouse inherits the higher benefit).

4. Belief that “the program is failing.” Despite the Trustees Report explicitly projecting continued payments at 77% of scheduled levels even after the 2033 trust fund depletion, many Americans believe the program will fail entirely. They claim early to “lock in” benefits before disappearance. As covered in the trust fund article, this fear produces a permanent 30% reduction in monthly benefits — a real loss — to protect against a hypothetical catastrophic loss that the data doesn’t support.

5. Persuasive but mathematically wrong popular advice. Financial personality Dave Ramsey has publicly recommended claiming at 62 and investing the difference. This advice is incorrect for the vast majority of retirees. To match the guaranteed 8% per year delayed retirement credit, you’d need to earn a similar after-tax, after-inflation, risk-adjusted return in investments — and there’s no investment vehicle that reliably delivers that. The NBER study and other research consistently show that the “claim early and invest” strategy underperforms simple delay for the overwhelming majority of households.

6. The cash bridge isn’t available. This is the only legitimate reason for early claiming, but it’s often confused with the others. If you’ve retired at 62 with no pension, no significant savings, and no other income source, you may genuinely need to claim Social Security to live on. That’s not a planning mistake; it’s a constraint. But many workers in this situation could have built bridge resources over their working years if they’d known the value of delay — and many workers at 62 who do have other resources still claim Social Security out of habit rather than need.

5. The “break-even” argument and why it misleads

A common heuristic in claiming-age discussions: “Calculate when you’d break even between claiming early and claiming late, and use your life expectancy to decide.” The logic seems sound. It’s also misleading because of three specific features of how the calculation actually works.

1. Break-even ignores cumulative cash flow during the delay period. If you claim at 62 and you’re comparing against waiting until 70, you’d receive 8 years of monthly checks (96 payments) before the delayed claimer gets their first dollar. That cumulative cash flow needs to be exceeded by the larger monthly benefit before the delayed-claim strategy comes out ahead. The math typically reaches break-even around age 80–82 — which sounds far away but is well within typical life expectancy.

2. Break-even ignores survivor benefits entirely. If you’re married, the surviving spouse inherits the higher of the two benefits when the higher earner dies. Delaying the higher earner’s claim past FRA increases not just the worker’s own lifetime benefit but the eventual survivor’s benefit — typically extending for another 10–15 years past the worker’s death. The full household calculation produces a much later break-even (often never, in survivor terms) than the individual calculation.

3. Break-even ignores risk-adjusted return. The 8% per year delayed retirement credit is a guaranteed federal obligation. To “match” it with an alternative strategy (claim early, invest the difference), you’d need an alternative investment with similar risk-adjusted return — and there isn’t one. Treasury bonds yield 4–5%. Equity returns average higher but with much higher risk. The delay strategy is comparable to a federally-backed annuity with built-in inflation protection — an extraordinarily valuable instrument that has no direct private-market equivalent.

The honest version of the break-even analysis: for a couple where the higher earner delays to 70, the household’s break-even is essentially never under realistic assumptions. The delayed claim is the dominant strategy.

For an individual unmarried retiree in poor health with no other resources, the break-even calculation can favor earlier claiming. For most retirees — married, healthy, with at least modest other income — the break-even argument doesn’t justify early claiming.

6. When claiming early actually does make sense

The NBER findings don’t mean every single retiree should claim at 70. The 10% of households where delaying isn’t optimal — or where claiming earlier is genuinely the right call — share specific characteristics:

1. Serious health concerns with documented shorter expected lifespan. A retiree with a diagnosed condition that significantly shortens life expectancy may rationally claim earlier. The “average life expectancy” assumption doesn’t apply if specific medical factors point to a shorter horizon.

2. No bridge income at all. A worker who retires at 62 with no pension, no savings, and no other income source needs the Social Security check to live on. Delay isn’t a planning choice if there’s nothing to live on during the gap years.

3. Lower earner in a married couple where the higher earner delays. This is the strategic move discussed in spousal and survivor Social Security for federal employees. The lower earner claims earlier to provide household income while the higher earner delays to 70. The higher earner’s eventual claim — and the survivor benefit — is the household’s long-term Social Security anchor. The lower earner’s smaller benefit is less critical because it will eventually be replaced by the survivor benefit anyway.

4. Specific tax or benefit interactions that favor earlier claiming. Rare, but possible. A retiree whose other income would push them into significantly higher tax brackets at 70 may, in some specific circumstances, find that earlier claiming produces a slightly better after-tax result. The interactions are complex and usually don’t change the overall analysis, but for some specific households the calculation differs.

5. Genuine desire for early retirement with no other path. Some workers simply want to stop working at 62 and have no other way to fund that decision. The choice to claim early may be financially suboptimal, but it serves a non-financial goal that the household has decided matters more than maximum lifetime income. This is a legitimate trade-off — it just shouldn’t be confused with a math-based recommendation.

For everyone outside these categories — the substantial majority of retirees, particularly those with pensions, TSP/401(k) balances, or even modest other savings — the NBER finding stands. Delay produces more lifetime income, more household-level financial security, and a higher survivor benefit for the spouse who outlives the other. The default of claiming at 62 is wrong for most of the people doing it.

7. How to actually wait until 70 (the bridge problem)

Knowing the math is one thing. Actually waiting until 70 — when income from somewhere has to fund the years between retirement and the eventual Social Security claim — is another.

For federal employees, the bridge problem has a built-in solution. Federal retirees under FERS receive a pension starting from their retirement date, plus the FERS Annuity Supplement for those who retire before age 62 with at least 20 years of service. The combination of FERS pension + supplement + TSP withdrawals can fund the years between retirement and the optimal Social Security claim, making delay-to-70 financially feasible without the cash-flow stress that private-sector workers often face. For the full mechanics of how the FERS supplement bridges this gap, see the FERS Annuity Supplement guide.

For private-sector workers without a pension, the bridge has to come from personal savings — 401(k) balances, IRA balances, taxable brokerage accounts, or part-time work income. The specific moves that build the bridge:

1. Build a “bridge fund” specifically for the 62-to-70 period. A target of roughly 8 years of expected Social Security benefits, in liquid or near-liquid form, gives you the cushion to delay the actual claim. Building this fund in the final 10–15 years of working life is the single most actionable retirement planning move for someone who wants to maximize lifetime income.

2. Use the gap years for Roth conversions. The period between retirement (often around 62–65) and Social Security claiming (70) is often a tax-efficient window for Roth conversions, because your income is lower than during working years and you haven’t yet started Social Security to push provisional income up. For the broader Roth conversion strategy, see the Social Security tax surprise article.

3. Withdraw from traditional accounts strategically. Drawing from 401(k) or traditional IRA balances in the gap years — at lower marginal tax rates than you’ll face later — funds the delay and also reduces your eventual Required Minimum Distributions, reducing the tax torpedo effect on your later Social Security benefits.

4. Consider part-time work. Even modest part-time income during the gap years can substantially reduce the amount you need to draw from savings, extending the bridge. Many retirees find part-time consulting, teaching, or other work fulfilling and meaningful while also producing real financial value.

5. Time the delay to your specific life expectancy. If you have specific reasons to believe you’ll live well past average life expectancy — strong family history, excellent current health, low-stress lifestyle — delay is even more valuable. If you have reasons to believe the opposite, delay may not be the right call. Your specific situation should override the average.

The math says delay. The execution depends on having a bridge in place. The work of building that bridge typically happens in the 10–15 years before retirement — which means anyone in their late 40s, 50s, or early 60s reading this article still has time to set up the conditions that make delay feasible.

8. Five questions retirees ask about when to claim