Social Security Claiming: Ace the Ultimate Marshmallow Test

It is no secret that delaying the start of your Social Security benefits will probably pay off big in the long run.  However, most retirees eschew the advice and start getting Social Security paychecks almost as soon as they are eligible.

According to a report by the Center for Retirement Research at Boston College, 90% of Americans begin Social Security retirement benefits at or before their full retirement age. In fact, the most popular age to start is 62, the earliest age possible.

Why Delaying the Start of Social Security Can Benefit You

If you have not yet started your Social Security, one of the best things you can do to live more comfortably, is to wait to claim your benefits.  If you have reached normal retirement age, which is 66 for people who were born between 1943 and 1959, you can access 100% of your benefits.

For each year after that, up to age 70, your benefits increase 8%, meaning you can access 32% more at age 70 than at age 66.

If those benefits are tapped at younger than normal retirement age, they are reduced based on the number of months you receive benefits before you reach your full retirement age. For example, if your full retirement age is 66, the reduction of your benefits at age 62 is 25%; at age 63, it is about 20%; at age 64, it is about 13.3%; and at age 65, it is about 6.7%, according to data from the Social Security Administration.

People who claim early are giving up nearly $100,000 in benefits over their lifetimes.

When to Start Social Security – The Ultimate Marshmallow Test

The marshmallow test is a now famous psychological experiment conducted by Walter Mischel at Stanford University in the late 1960s. Researchers offered children a choice between one marshmallow immediately or, if they could wait for a short period of time, they would get two marshmallows. 

• Videos of children struggling with the decision can be heartwarming and hilarious.

The researchers found that those who can delay gratification and wait for the larger reward tended to have better life outcomes overall.

Why the decision of when to start Social Security is like the marshmallow test

For some people, the decision of when to start Social Security benefits is like the marshmallow test. You can collect a smaller benefit immediately or wait and get a bigger benefit in the future. When you delay the start of Social Security benefits, your monthly benefit amount goes up significantly.

Here are some parallels (that apply to most people) between delaying Social Security and winning the marshmallow test:

1. Delayed Gratification: In both cases, individuals are choosing to delay immediate rewards for larger benefits in the future. By waiting to claim Social Security benefits, individuals can receive a higher monthly payment when they eventually start collecting.
2. Increased Rewards: Just as waiting for the second marshmallow meant getting a larger reward, delaying Social Security can result in a higher monthly benefit. Social Security benefits increase for each year you delay claiming them, up until the age of 70.
3. Long-Term Planning: Both concepts involve a form of long-term planning. Delaying Social Security can be part of a broader financial strategy to maximize retirement income, especially for those who expect to live longer.
4. Financial Discipline: Delaying Social Security requires financial discipline, much like the self-control needed in the marshmallow test. It involves resisting the temptation to claim benefits early and choosing to wait for a potentially more significant reward.

It’s important to note that the decision to delay Social Security benefits depends on individual circumstances, such as health, financial needs, and other retirement income sources. While delaying can lead to higher monthly payments, it may not be the best choice for everyone, and individuals should carefully consider their own situation before making this decision.

Psychological Tips to Delay Social Security and Win the Ultimate Marshmallow Test

1. Economist Figures Out Possible Way to Trick People into Waiting to Start Benefits

Olivia Mitchell is an economist at the Wharton School of the University of Pennsylvania.

She tested ideas that may help people make the “right” – more profitable – decision about when to start Social Security.

Mitchell ran an experiment.  She offered different kinds of incentives to people for delaying the start of Social Security benefits and the results are very interesting:

• If potential Social Security recipients were told the difference in benefits they could receive if they claimed at age 62 vs delaying until age 66, 50% of people opted to delay.
• If people needed to work during the waiting time to start benefits, then only 46% opted to delay.
• However, if the researchers promised recipients that if they delayed their claim then they would get $1,000 a month and a lump sum of $60,000 when they claimed at 66? Then the willingness to delay rose to 70.3% (no work while waiting) or 55.5% (working half-time while waiting).

So, it appears that getting a lump sum payout might be an interesting incentive to get people to delay starting Social Security.

2. Remind Yourself of the Benefits of Waiting

The $60,000 incentive to delay the start of Social Security benefits described above was only experimental.  However, there are ways that you might be able to convince and reward yourself for delaying the start of benefits.

Some of the children who aced the marshmallow test constantly reminded themselves about the benefits they were waiting to earn.  You can do something similar with your Social Security benefits:

Make sure you understand the advantages of waiting.

First, figure out the potential lifetime value of your own Social Security benefits if you start at 62 or your maximum retirement age.  To do this:

1. Find out the monthly value of your benefit at 62 and the monthly value of your benefit at your maximum retirement age.
2. Next, take a guess about how long you will live and figure out how many months you will be receiving benefits if you start at 62 or if you start at a delayed age.
3. Finally, multiply the benefit amounts by the number of months you will be receiving benefits.
4. You may be surprised by how much more money you will receive over your lifetime if you delay benefits.

To do this calculation automatically, try the Break Even Social Security Calculator.

Plan a Future Reward

Knowing how much more money you will earn over your lifetime might not be enough of an incentive for you to delay the start of benefits.  So, perhaps you might want to consider giving yourself an additional incentive like Mitchell did in her experiment or successful marshmallow test kids have done.

Could you plan a special splurge when you ultimately start your benefits?

Distract Yourself from the Idea of Starting Social Security Early

Children who were successful at the marshmallow test would find ways to distract themselves from the temptation of the immediate reward. They looked away from the marshmallow, sang a song, or engaged in some other activity to take their minds off the temptation.

How can you distract yourself from thinking about the temptation of extra income at age 62?

Use Your Imagination

Some of the children who were able to wait and get two marshmallows used their imaginations. They thought through the details of the consequences of their actions – imagining the disappointment of a researcher or a parent if they gave in to temptation.

You can imagine yourself in old age with less income in the future. It can also be

Use the Boldin retirement calculator to experiment with different incentives and different Social Security start dates.  You can model giving yourself a financial reward or delaying the start of benefits and see how your finances throughout retirement are impacted.  Discover meaningful ways you can improve your retirement finances.This tool was named a best retirement calculator by the American Association of Individual Investors (AAII).