When to claim Social Security is as much a dilemma for advisors as it is for their clients, and that motivated our firm to research how to resolve it. A recent paper on our research does in fact propose a solution that provides more certainty and clarity and may lead to higher long-term Social Security benefits.

Despite the clear advantage of deferring benefits to 70, which offers higher benefits over the life of a beneficiary, and is a way to mitigate longevity risk, few retirees actually do that. Based on the Social Security Administration’s records, only 4 percent of women and 2 percent of men claimed benefits at 70 in 2013, compared with 27 percent of women and 34 percent of men who claimed it at full retirement age of 65 or 66. A recent study by Nationwide found that among those who claim benefits early, 25 percent indicated that they did not think that they would live long enough to make it worth optimizing benefits. Clearly, mortality concern is a key factor in retirees’ decision on when to claim Social Security. Given that the average life expectancy for retirees at 65 is about 84.3, retirees appear to have a reasonable expectation of their mortality risk.

A Leverage Strategy

In order to address clients’ mortality concern, our paper proposes that retirees can claim benefits early at 66, and invest the proceeds from 66 to 69 in a way that would result in more money in the long run than deferring benefit claim to 70. The strategy, in effect, transforms full-retirement-age benefits into long-term retirement resources, thereby mitigating both mortality and longevity risks. How well the strategy works is laid out in detail in our report on our website, http://www.plenarisadvisory.com/files/59550/Social%20Security.pdf. This article summarizes the methodology and the key findings of the report. Our overall finding is that the strategy will work and will enhance a retiree’s retirement resources consistently to age 100. 


The proposed strategy is based on three components: the beneficiary population, the benefit amounts for early and deferred social security and the leverage options.

1. The Beneficiary Population

The study focused on five beneficiary scenarios in order to assess how effective the strategy is for each beneficiary category. 

Scenario 1 covers single retirees, both male and female. Scenario 2 covers a couple, each of whom is entitled to the same benefit and is identified as “couple with 200 percent benefit” in this study. Scenario 2A covers the same couple as Scenario 2, but with one spouse dying at life expectancy of 85.  Scenario 3 covers a couple with one spouse claiming Social Security as a spousal benefit, and is identified as “couple with 150 percent benefit,” which amounts to 75 percent of the benefit of the couple in Scenarios 2 and 2A. Finally, Scenario 3A covers the same couple as in Scenario 3, but with one spouse dying at life expectancy of 85. 

All beneficiaries are assumed to have relatively high income that puts them in the 28 percent tax bracket and enables them to defer benefits to 70, a key variable for this proposed strategy.