A retiree waited until 70 for Social Security and got one check

A man who held off claiming Social Security until age 70 received only about one payment before dying of brain cancer, according to a question sent to MarketWatch’s Moneyist column.

The reader, writing to columnist Quentin Fottrell, said the man was a younger brother who had stayed in good health through much of his 60s. The brother chose to wait for a larger monthly benefit, then was diagnosed with cancer and died at 70.

The case put a brutal spotlight on one of retirement’s most personal money calls: claim early and take smaller checks, or wait and hope the richer monthly benefit has time to pay off.

The break-even bet

The reader told Fottrell that an earlier personal calculation put the Social Security break-even point at about age 80. In the reader’s view, if the brother had started collecting at 62, he would have had eight years of payments during a period when he was still active.

The reader also said they had been skeptical of what they described as government encouragement to delay benefits, arguing that some people who wait will die before collecting much, or anything.

Fottrell answered that the argument for taking benefits earlier has logic when viewed from an individual’s life, because nobody knows their own health future. He cited Centers for Disease Control and Prevention figures putting average U.S. life expectancy at birth at 79 years, with women at 81.4 years and men at 75.8 years.

Those figures sit close to the break-even age many retirees face, Fottrell wrote, but averages are a blunt tool for one person’s retirement.

Why waiting can still make sense

Fottrell described Social Security as a collective insurance system, with benefits designed to be used when retirees need them. He wrote that the program is not trying to trick people, while acknowledging that delayed claiming can help the system in theory if some people die before or soon after starting benefits.

For retirees who can afford to hold off, waiting can mean a higher check. Fottrell noted that delaying can add 8% a year up to age 70. Some retirees bridge the gap by continuing to work or drawing from retirement accounts such as an IRA or 401(k), he wrote.

Others do not have that luxury. Fottrell said some people claim at 62 because they need the income, accepting a permanent reduction of 30% from what they would have received at their full retirement age of 67. Some choose a middle path and claim between 62 and 70.

The best age to claim depends on health, family history, money needs and how useful the income will be earlier versus later, according to Fottrell.

The program’s own clock is ticking

Fottrell also pointed to broader pressure on Social Security. He wrote that the system ran annual surpluses from 1984 through 2020, meaning payroll-tax income was higher than benefit costs.

He said reports now suggest benefits could be reduced as early as 2033, with retirees receiving 77% of scheduled benefits unless Congress acts. Fottrell noted that Congress intervened when Social Security neared a funding crisis in the early 1980s, but said whether lawmakers will do so again remains uncertain.

For the reader’s brother, the delayed-claiming wager ended painfully. For everyone else, Fottrell’s answer was less tidy: Social Security timing is a bet on money, health and time, and no table can tell one household exactly how long the road will run.

This story draws on original reporting from MarketWatch.