The Value of Delayed Social Security Claiming for Higher-Earning Women

Abstract

This study estimates the expected benefit from delayed Social Security claiming for higher-earning, healthier women who can expect to receive more future income payments than other Americans. The expected net present value of Social Security payments from delayed claiming for healthy women is $179,999, or more than twice the value of delayed claiming for a male of average health. The benefit from delayed claiming ranges from a low of $16,548 per year to $29,395 per year for healthy women. Even average health women gain at least $132,202 in Social Security wealth by waiting until age 70 to claim Social Security income benefits. Significant gains to women who delay claiming are robust to a 2% increase in real discount rates and to a 21% reduction in income that could occur if the Social Security trust fund depletes in 2026. The added benefits from reduced longevity and inflation risk suggest that the failure to delay claiming results in a significant loss in both retirement wealth and expected welfare.

Keywords: Social Security, retirement, personal finance

JEL Classification: H55,D12,D14