Carla Fried: Inflation is more reason to delay taking Social Security

Carla Fried, on

Published in Business News

The recent increase in inflation could mean retirees already receiving their Social Security benefit might see 2022 it rise by about 5%, which would be the biggest annual cost-of-living adjustment (COLA) in more than a decade.

But the even bigger payoff from a large Social Security COLA will be for anyone at least 62 who has yet to start collecting, and keeps delaying their start date.

Inflation and Social Security

Anyone nearing 60 or in their early 60s has likely already heard plenty about the big financial payoff if you delay when you start collecting Social Security past age 62. Every year (actually, every month) you delay up until you turn 70 earns you a bigger eventual benefit.

The formula for exactly how much more you get each year is based on your birth year. For someone born in 1960 or later, at age 67 — what the Social Security programs refer to as your full retirement age (FRA) — you are entitled to 100% of your benefit. Start at age 62 and your benefit will be 70% of what you would get if you waited until 67.

Wait until age 70 and your benefit will earn a delayed credit of another 8% a year for those three years, earning you a benefit 124% of your FRA benefit.


But the payoff for waiting is actually even bigger than that. Every year between age 62 and 70 that you wait to start collecting, you not only get the delayed credit, but you also earn whatever the official Social Security inflation COLA is for that year.

We won’t know the exact 2022 Social Security COLA for a few more months, but careful inflation-index watchers note that the adjustment for next year will likely be at least triple the 1.3% adjustment current and future beneficiaries received this year.

Too few people wait to claim Social Security

Recent research confirms that we’re collectively getting smarter about when to start Social Security benefits. Since 1985 the percentage of men who settled for the lowest possible benefit by claiming at age 62 has fallen by 27%, and for women those choosing age 63 has declined by 21%.


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