Q. What's the benefit of delaying social security benefits?
A. There is a recent academic research from the Journal of Financial Planning - Recent Changes in the Gains from Delaying Social Security - that answers this exact question, quantitatively.
In the paper the two authors looked at the benefits of delaying Social Security in the historical context. As it turns out, a number of changes over the past several decades have significantly increased the actuarial value of delaying; in particular:
The Bottom Line
As a result of all these various changes, it really has gotten a lot more valuable to delay Social Security benefits for retirees today that it was just two decades ago. The authors conclude that the Net Present Value of Social Security benefits are increased by about 1%-2% for singles, 5%-6% for two-earner couples, and 2%-4% for one-earner couples.
A. There is a recent academic research from the Journal of Financial Planning - Recent Changes in the Gains from Delaying Social Security - that answers this exact question, quantitatively.
In the paper the two authors looked at the benefits of delaying Social Security in the historical context. As it turns out, a number of changes over the past several decades have significantly increased the actuarial value of delaying; in particular:
- Longevity has increased (above the assumptions around which Social Security was based)
- Real interest rates have declined (below the discount rates inherent in Social Security's actuarial calculations).
- File-and-suspend rules - have made delaying even more appealing in certain situations
The Bottom Line
As a result of all these various changes, it really has gotten a lot more valuable to delay Social Security benefits for retirees today that it was just two decades ago. The authors conclude that the Net Present Value of Social Security benefits are increased by about 1%-2% for singles, 5%-6% for two-earner couples, and 2%-4% for one-earner couples.
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