Eyeing the Cake

Greg Spears

I JUST REACHED my full Social Security retirement age of 66 and four months. Funny, I don’t feel a bit older. Still, I am now entitled to 100% of the benefit that I’ve earned since I started working.

Conventional wisdom says to delay filing. Each month that I wait will add 2/3rds of 1% to my eventual benefit. That adds up to a risk-free 8% a year. If I were to wait until I turn 70, I’d get the maximum possible payment under the rules of the game.

Only 3% of Social Security beneficiaries wait until age 70—and I now know why. My wife and I have been savers all our lives. But today, we’re subtracting from our accounts, and it feels unnatural. The bear market hasn’t helped. On top of that, I feel inflation’s drag whenever I wheel a cart around the grocery store or gas up the car.

I didn’t have any trouble waiting from age 62, when I first became eligible to receive benefits, until now. I was working most of that time. But now that I’m largely retired, it feels like there’s a rich chocolate cake waiting for me in the kitchen. It’s been on my mind.

Everyone says you can’t get a risk-free 8% return anywhere else. On the other hand, if I file for benefits now, I stand to enjoy the largest cost-of-living adjustment (COLA) in 40 years. If inflation continues to run hot, it could be more than 10%.

To be sure, that COLA will also boost my eventual monthly check, whenever I choose to claim it. I have a hefty benefit increase coming, whether I file for Social Security right away or delay. In the interest of willpower, I’ve chosen to think of my choice as a layer cake. Each year I wait, I’ll be getting an extra layer equal to 8% plus the rate of inflation.

In other words, if I delay one year, I might get an 18% raise. Two years might deliver—who knows?—perhaps a cumulative gain of more than 30%.

If I can just wait it out.

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