As you probably know, Social Security benefits can be claimed at any point between ages 62 and 70. The longer you wait, the larger the benefit.
Some people decide to claim benefits on the earlier side because they worry that they won’t live long enough to “break even” if they wait and forego benefits for some number of years. Economist Laurence Kotlikoff makes an important point, though:
“We can’t determine when we’re going to die. We have to focus first and foremost on the worst case, as if we’re going to live forever. Living a long time is a financial disaster.”
In other words, Social Security is longevity insurance. If you wait to claim benefits but end up dying early, you will lose out on some benefits. No question about that. But the much bigger risk is this: If you claim benefits too early, and as a result are stuck with a much smaller check, and then live a very long time, you could have a problem late in life if money is running tight. That’s one of the reasons I almost never recommend claiming benefits early.
