How Much Lifetime Social Security Benefits Are Americans Leaving on the Table?

Americans are notoriously bad savers. Large numbers are reaching old age too poor to finance retirements that could last longer than they worked. This study uses the 2018 American Community Survey to impute retirement ages for 2019 Survey of Consumer Finances (SCF) respondents. Next, we run the SCF respondents through the Fiscal Analyzer (TFA) to measure the size and distribution of forgone lifetime Social Security benefits. TFA is a life-cycle, consumption-smoothing research tool that incorporates Social Security and all other major federal and state tax and benefit policies. The program can optimize lifetime Social Security choices. We find that virtually all American workers age 45–62 should wait beyond age 65 to collect. More than 90% should wait till age 70. Only 10.2% appear to do so. The median loss for this age group in the present value of household lifetime discretionary spending is $182,370. Optimizing would produce a 10.4% increase in typical workers’ lifetime spending. For one in four, the lifetime spending gain exceeds 17%. For one in 10, the gain exceeds 26%. Among the poorest fifth of 45- to 62-year-olds, the median lifetime spending increase is 15.9%, with one in four gaining more than 27.4%.