Abstract
Although individuals who delay the receipt of social security benefits are entitled to larger monthly payments, 57% of recipients elect to receive benefits early. This article compares the present value of social security benefits when taken early to the present value of benefits taken at the full or maximum retirement ages, taking into account factors such as average life expectancy and the time value of money. Furthermore, we expand on prior research by investigating how tax rates may affect these comparisons. Overall, our analyses suggest that taking social security early may be advantageous for many individuals. <b>Key Findings</b> ▪ Electing to receive social security benefits early may yield a higher expected present value stream of payments for those with a moderate risk profile. ▪ Early election may be most beneficial for retirees with the majority of their savings in tax-free accounts. ▪ However, the benefit of electing early appears to persist even for those with retirement portfolios subject to substantial taxation.
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