Shoven Says: Defer Social Security Benefits

John Shoven’s practical advice on when people should start taking Social Security benefits is rightly getting  increased attention. The economics is quite straight forward, and baby boomers should pay careful attention. So should the Social Security Administration. 

This table from John’s Policy Brief at the Stanford Institute for Economic Policy Research shows how much people’s benefits increase when they delay taking Social Security beyond age 62.   The increase is very large and for most reasonable calculations of life expectancy will easily offset the foregone payments, as John’s research with Sita Slavov shows.

Shoven Table 1

Yet, as this chart (also from John’s paper) indicates, most people to not delay benefits, and would thus be better off if they followed John’s advice. As John puts it “Social Security deferral is a good deal for most people.”

Shoven Fig 1

Of course, if more people follow his advice, federal spending and the deficit will be lower in the short run, but higher in the long run, unless offsetting changes are made.

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