Claim at 62 or 70? The Biggest Raise in Retirement

The lessons we can learn from the game of Poker

During your working years, a raise came from a boss, and it usually came grudgingly. In retirement, the largest raise most Americans will ever be offered comes from a calendar instead — and almost nobody thinks of it that way. It is the Social Security claiming decision. You may begin collecting as early as sixty-two, but for those whose full retirement age is sixty-seven, claiming at sixty-two cuts the monthly benefit by roughly thirty percent, permanently. Wait past full retirement age and the benefit grows by about eight percent a year in delayed retirement credits, until age seventy. The difference between the check at sixty-two and the check at seventy is often more than seventy-five percent — and the larger amount is adjusted for inflation for the rest of your life.

Look at those terms the way a poker player looks at a wager. Delaying Social Security is the last raise most of us will ever be offered: roughly eight percent a year, guaranteed, inflation-adjusted, paid for life. No investment on any statement can promise that. If an employer had offered you an automatic eight percent raise for every year you agreed to stay on the job, you would not have waved it away without doing the arithmetic. Yet every month, retirees decline this raise without ever pricing it — they file at sixty-two because sixty-two was the first door that opened.

Put the decision in monthly dollars and it stops being abstract. Suppose your benefit at full retirement age would be $2,000. Claim at sixty-two and the roughly thirty percent reduction leaves you about $1,400 a month. Wait until seventy and the delayed credits lift the same benefit to roughly $2,480. That is a difference of more than a thousand dollars a month — over $12,000 a year, every year, for as long as you live, keeping pace with inflation as it goes. Across a long retirement, the gap between those two filing dates is not a detail. It is one of the largest sums of money most households will ever decide about in a single signature.

None of this means everyone should wait. The raise has a purchase price: to collect the bigger check later, you must fund the waiting years from other chips — savings, investments, perhaps part-time work. Some people cannot do that. A worker laid off at sixty-two with no other income is not declining a raise; he is paying his rent. Health is the other honest reason. A person with good cause to expect a shorter life may rationally take the money while it can still be enjoyed, and no adviser sitting in a comfortable office should sneer at that. Claiming early is sometimes the right play. The mistake is claiming early by default.

In my law practice, that default is what I saw. Clients filed at sixty-two because a brother-in-law had, or because a neighbor warned them the system would run out of money, or because the first eligibility letter felt like an instruction. Fear of change in the program is understandable, but notice the shape of that bet: it trades a guaranteed, larger, inflation-protected income for life against a guess about what Congress might someday do. That is a speculation, not a plan, and it deserves to be recognized as one before it is made.

So treat the claiming date like the serious wager it is. Waiting is, in effect, buying something: you spend portfolio dollars in your sixties to purchase a bigger guaranteed income for your seventies, eighties, and beyond — the years when earning it back is no longer possible. Whether that purchase pays off depends on how long you live, which is the breakeven question, and the honest subject of the next count. But even before that arithmetic, the first step is simply to see the raise for what it is, in dollars, on paper.

Here is the takeaway. Before you file, get your benefit estimates from the Social Security Administration and write down the three numbers side by side: your monthly check at sixty-two, at full retirement age, and at seventy. Then calculate what the raise for waiting is actually worth to you per month and per year. If you still claim early — because you need the income, or because your health gives you honest reason — claim with your eyes open. Just do not decline the biggest raise of your life without ever having read the offer.

The lessons we can learn from the game of Poker

During your working years, a raise came from a boss, and it usually came grudgingly. In retirement, the largest raise most Americans will ever be offered comes from a calendar instead — and almost nobody thinks of it that way. It is the Social Security claiming decision. You may begin collecting as early as sixty-two, but for those whose full retirement age is sixty-seven, claiming at sixty-two cuts the monthly benefit by roughly thirty percent, permanently. Wait past full retirement age and the benefit grows by about eight percent a year in delayed retirement credits, until age seventy. The difference between the check at sixty-two and the check at seventy is often more than seventy-five percent — and the larger amount is adjusted for inflation for the rest of your life.

Look at those terms the way a poker player looks at a wager. Delaying Social Security is the last raise most of us will ever be offered: roughly eight percent a year, guaranteed, inflation-adjusted, paid for life. No investment on any statement can promise that. If an employer had offered you an automatic eight percent raise for every year you agreed to stay on the job, you would not have waved it away without doing the arithmetic. Yet every month, retirees decline this raise without ever pricing it — they file at sixty-two because sixty-two was the first door that opened.

Put the decision in monthly dollars and it stops being abstract. Suppose your benefit at full retirement age would be $2,000. Claim at sixty-two and the roughly thirty percent reduction leaves you about $1,400 a month. Wait until seventy and the delayed credits lift the same benefit to roughly $2,480. That is a difference of more than a thousand dollars a month — over $12,000 a year, every year, for as long as you live, keeping pace with inflation as it goes. Across a long retirement, the gap between those two filing dates is not a detail. It is one of the largest sums of money most households will ever decide about in a single signature.

None of this means everyone should wait. The raise has a purchase price: to collect the bigger check later, you must fund the waiting years from other chips — savings, investments, perhaps part-time work. Some people cannot do that. A worker laid off at sixty-two with no other income is not declining a raise; he is paying his rent. Health is the other honest reason. A person with good cause to expect a shorter life may rationally take the money while it can still be enjoyed, and no adviser sitting in a comfortable office should sneer at that. Claiming early is sometimes the right play. The mistake is claiming early by default.

In my law practice, that default is what I saw. Clients filed at sixty-two because a brother-in-law had, or because a neighbor warned them the system would run out of money, or because the first eligibility letter felt like an instruction. Fear of change in the program is understandable, but notice the shape of that bet: it trades a guaranteed, larger, inflation-protected income for life against a guess about what Congress might someday do. That is a speculation, not a plan, and it deserves to be recognized as one before it is made.

So treat the claiming date like the serious wager it is. Waiting is, in effect, buying something: you spend portfolio dollars in your sixties to purchase a bigger guaranteed income for your seventies, eighties, and beyond — the years when earning it back is no longer possible. Whether that purchase pays off depends on how long you live, which is the breakeven question, and the honest subject of the next count. But even before that arithmetic, the first step is simply to see the raise for what it is, in dollars, on paper.

Here is the takeaway. Before you file, get your benefit estimates from the Social Security Administration and write down the three numbers side by side: your monthly check at sixty-two, at full retirement age, and at seventy. Then calculate what the raise for waiting is actually worth to you per month and per year. If you still claim early — because you need the income, or because your health gives you honest reason — claim with your eyes open. Just do not decline the biggest raise of your life without ever having read the offer.

The lessons we can learn from the game of Poker

During your working years, a raise came from a boss, and it usually came grudgingly. In retirement, the largest raise most Americans will ever be offered comes from a calendar instead — and almost nobody thinks of it that way. It is the Social Security claiming decision. You may begin collecting as early as sixty-two, but for those whose full retirement age is sixty-seven, claiming at sixty-two cuts the monthly benefit by roughly thirty percent, permanently. Wait past full retirement age and the benefit grows by about eight percent a year in delayed retirement credits, until age seventy. The difference between the check at sixty-two and the check at seventy is often more than seventy-five percent — and the larger amount is adjusted for inflation for the rest of your life.

Look at those terms the way a poker player looks at a wager. Delaying Social Security is the last raise most of us will ever be offered: roughly eight percent a year, guaranteed, inflation-adjusted, paid for life. No investment on any statement can promise that. If an employer had offered you an automatic eight percent raise for every year you agreed to stay on the job, you would not have waved it away without doing the arithmetic. Yet every month, retirees decline this raise without ever pricing it — they file at sixty-two because sixty-two was the first door that opened.

Put the decision in monthly dollars and it stops being abstract. Suppose your benefit at full retirement age would be $2,000. Claim at sixty-two and the roughly thirty percent reduction leaves you about $1,400 a month. Wait until seventy and the delayed credits lift the same benefit to roughly $2,480. That is a difference of more than a thousand dollars a month — over $12,000 a year, every year, for as long as you live, keeping pace with inflation as it goes. Across a long retirement, the gap between those two filing dates is not a detail. It is one of the largest sums of money most households will ever decide about in a single signature.

None of this means everyone should wait. The raise has a purchase price: to collect the bigger check later, you must fund the waiting years from other chips — savings, investments, perhaps part-time work. Some people cannot do that. A worker laid off at sixty-two with no other income is not declining a raise; he is paying his rent. Health is the other honest reason. A person with good cause to expect a shorter life may rationally take the money while it can still be enjoyed, and no adviser sitting in a comfortable office should sneer at that. Claiming early is sometimes the right play. The mistake is claiming early by default.

In my law practice, that default is what I saw. Clients filed at sixty-two because a brother-in-law had, or because a neighbor warned them the system would run out of money, or because the first eligibility letter felt like an instruction. Fear of change in the program is understandable, but notice the shape of that bet: it trades a guaranteed, larger, inflation-protected income for life against a guess about what Congress might someday do. That is a speculation, not a plan, and it deserves to be recognized as one before it is made.

So treat the claiming date like the serious wager it is. Waiting is, in effect, buying something: you spend portfolio dollars in your sixties to purchase a bigger guaranteed income for your seventies, eighties, and beyond — the years when earning it back is no longer possible. Whether that purchase pays off depends on how long you live, which is the breakeven question, and the honest subject of the next count. But even before that arithmetic, the first step is simply to see the raise for what it is, in dollars, on paper.

Here is the takeaway. Before you file, get your benefit estimates from the Social Security Administration and write down the three numbers side by side: your monthly check at sixty-two, at full retirement age, and at seventy. Then calculate what the raise for waiting is actually worth to you per month and per year. If you still claim early — because you need the income, or because your health gives you honest reason — claim with your eyes open. Just do not decline the biggest raise of your life without ever having read the offer.

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