Social Security benefits kick in at age 62. But your future self might thank you for waiting a few extra years to collect them. New research suggests that delaying Social Security claims could help older Americans receive a larger monthly payment in the future. As the country continues to deal with the fallout of the pandemic and record-setting inflation, researchers from Cornell University say one of the biggest challenges of retiring is making your money stretch for the rest of your days. Learning when is best to start claiming social security is a big part of that.
“It’s incredibly complicated. Some people call it the hardest problem in finance, trying to figure out how to take whatever money you have when you hit retirement and make it last,” says Suzanne Shu, a John S. Dyson professor in marketing at the Cornell SC Johnson College of Business, in a university release.
Shu and her team are studying how older adults can make informed decisions regarding the best ways to claim Social Security. The team recruited 2,500 people between 40 and 61 to participate in a marketing experiment. They divided everyone into 14 groups, with one serving as the control. The other 13 followed five broad classes of intervention.
What should do you consider before claiming?
The first idea involved teaching people to think about the gains they could get by delaying their Social Security claims. The second taught them normative messages about saving their money based on what they considered to be “normal” behavior after retirement.
The third intervention taught participants how to anticipate the effects of a decision. This means taking into consideration any regrets from their future selves. The fourth intervention taught Americans how to contextualize information surrounding their needs in retirement. The final intervention was a self-reflection, including thinking about the downside risk of “living too long.”
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“We were doing it almost as a horse race, saying, ‘OK, here’s a bunch of different ideas of what might work. Let’s put them all side by side and see which ones actually move the needle the most,’” Shu explains.
There is no right decision regarding the best time to claim Social Security — everyone’s financial and personal situations are different. However, researchers note that payment framing or thinking about the benefits they could earn from waiting a few years to claim makes the biggest difference in finding each person’s best solution.
“Everyone feels like their own working career is unique, their own family situation is unique, and their own life expectations are unique,” Shu says. “You might decide that you’re going to claim at 62 because you feel like you could use it now. Without regard for how the 66-year-old you is going to feel about it in a few years.”
The study is published in the Journal of Marketing Research.