Why Working Longer to Max Out Social Security Isn't a Sure Bet

The idea of working longer before claiming Social Security benefits sounds like a great retirement strategy. Staying on the job means you can maximize your eventual benefit, continue to save for retirement and avoid tapping your investments to cover living expenses.

There’s just one problem: working longer is an unrealistic option for many. That’s the finding of the book, “Overtime: America’s Aging Workforce and the Future of Working Longer,” a collection edited by Lisa F. Berkman and Beth C. Truesdale, and published by Oxford University Press in 2022.

“Though today’s middle-aged adults are less financially prepared for retirement than today’s retirees, delayed retirement is not an adequate solution,” the editors write. “Precarious working conditions, family caregiving responsibilities, poor health, and age discrimination make it difficult or impossible for many to work longer.”

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A Look at the Numbers

That conclusion is borne out by the Social Security Administration’s own statistics. While nearly 13% of workers nearing retirement say they’ll wait to claim the biggest possible payout, only 5% of people wait to claim benefits at age 70. Instead, about one-quarter of all men and one-third of all women opt to collect benefits as soon as become eligible at age 62.

Even worse, the administration notes that “[m]ore than one in eight of today’s 20-year-olds will die before reaching age 67.”

Nonetheless, financial advisers continue to promote the idea of waiting to maximize your benefit. On paper, it’s an idea that makes perfect sense: delaying your benefits from the full retirement age of 67 to 70 adds 8% to your benefit amount each year, a cumulative 32% increase in benefit cash. And, since Social Security benefits adjust with inflation, a bigger initial benefit means a bigger increase from the cost-of-living adjustments.

The Problem With Working Longer

As a 2022 report from the National Bureau of Economic Research noted, “Americans are notoriously bad savers. Large numbers are reaching old age too poor to finance retirements that could last longer than they worked.” The study concluded that “virtually all American workers age 45 to 62 should wait beyond age 65 to collect. More than 90 percent should wait till age 70.”

The idea makes sense and the “Overtime” editors agree. “Longer life expectancies mean that Americans need income to support more years of life, and working longer is a commonly proposed solution,” they write.