Social Security: Patience Pays, but Few Are Waiting
A new study from investment firm Schroders finds that nine out of ten working Americans plan to disregard one of the most common pieces of financial advice about Social Security — waiting until age 70 to claim benefits, which guarantees larger monthly checks.
Early vs. Late Claiming
Workers can begin collecting benefits at 62, five years before the current full retirement age of 67. But claiming early reduces monthly payments by about 30% for life. Delaying until age 70, on the other hand, increases benefits by roughly 24% compared with claiming at full retirement age.
Financial planners often recommend waiting as long as possible, since filing early can cost retirees an estimated $182,000 in lost benefits.
Yet, Schroders’ survey of 1,500 adults found only 10% plan to wait until 70, while 44% expect to claim before full retirement age. Most respondents said they understand the trade-offs but still plan to take benefits sooner.
Why So Many Claim Early
“The decision to sacrifice extra Social Security income is not an oversight for most Americans,” said Deb Boyden, head of U.S. defined contribution at Schroders. “Seventy percent know that waiting means higher payments, yet so few are willing to hold off.”
Boyden said many workers simply need the income immediately upon retiring due to limited savings and rising living costs. Others claim early because of health concerns or fears they won’t live long enough to benefit from waiting.
For example, someone who starts collecting at 62 might receive about $1,400 per month, compared to $2,480 if they waited until 70. But it would take more than 10 years for the higher benefit to make up for those eight years of early payments — a key consideration for those with shorter life expectancies.
Concerns About Social Security’s Future
Many Americans also worry the program’s funding challenges could threaten their benefits. The Social Security Board of Trustees projects that its trust funds will become insolvent by 2034, potentially triggering a 20% reduction in payments unless Congress acts.
Experts say reforms — such as raising the income cap on taxable earnings, now $176,100 — could strengthen the system.
The Retirement Gap
Non-retired Americans told Schroders they expect to need about $5,000 a month to retire comfortably, but today’s retirees average only $3,250 in income. That shortfall underscores a growing retirement savings gap, as many younger workers report struggling to save due to high housing and living costs, according to a separate Goldman Sachs study.
