Social Security timing gets a reality check after one-check tragedy

A man waited until 70 to take Social Security, received one payment, then died from cancer. In MarketWatch’s Moneyist column, that painful case became the latest flashpoint in a familiar retirement fight: claim early, wait for a bigger check, or accept that nobody gets to see the ending in advance.

Quentin Fottrell, who writes The Moneyist, published a response to a reader who argued that the man’s death shortly after claiming benefits should not be used to judge whether waiting was sensible. The reader said the decision had to be assessed based on what was known at the time, not on the date of death that followed.

The reader’s argument was blunt: delaying benefits already includes the risk that a retiree may die before collecting much, or anything at all. The fact that the man was able to wait until 70 also indicated, in the reader’s view, that he had enough money to get through his 60s without drawing Social Security.

Fottrell said he largely agreed with that framing. He described Social Security as an insurance system rather than an account that belongs to an individual worker. If someone dies before using all the value they might have collected, the remaining money does not pass to heirs in the same way an IRA balance might.

That difference sits at the heart of the emotional argument. The brother who wrote to MarketWatch about the 70-year-old man was grieving the benefits his sibling never got to enjoy, Fottrell said. The reaction was tied to loss and to a sense of what might have been, rather than to a clean calculation from retirement tables.

The claiming math

Fottrell wrote that claiming Social Security at 62, at full retirement age or at 70 should depend in part on expected longevity. He said someone taking benefits at full retirement age, 67, instead of 62 should be prepared to live beyond their late 70s. Someone waiting until 70 rather than 67 would need to live past the early 80s for the larger monthly checks to pull ahead.

Family history can help, Fottrell noted. If parents lived into their 90s, waiting may be more attractive. Still, the central gamble remains the same: no retiree knows how long they will live.

The Social Security Administration designs early-claiming reductions so lifetime benefits are roughly equivalent on average, according to an SSA policy brief cited by Fottrell. The same brief says benefits taken before full retirement age are reduced permanently for early retirement.

Longevity is unequal

Fottrell also pointed to research showing that life expectancy gains are not spread evenly. A study cited in the column found that among men born in the 1930s compared with those born in the 1960s, people in the highest-income groups are projected to gain seven to eight additional years of life expectancy after age 50. Those in the lowest-income groups are projected to gain little or nothing.

That gap means higher-income Americans are more likely to collect Social Security and Medicare for longer periods, according to the study. The researchers also said changes such as raising the full retirement age, adjusting cost-of-living formulas or lifting the payroll-tax cap would have only a fairly small effect on Social Security’s progressivity.

The Brookings Institution has also argued that the life-expectancy divide between richer and poorer Americans has widened, raising fairness concerns around some Social Security reform proposals, Fottrell wrote.

For the man who died at 70, Fottrell said the outcome was personally painful but did not prove the original choice was flawed. Waiting gave him the chance at a larger benefit if he lived longer. Fate took away the payoff.

This story draws on original reporting from MarketWatch.