'I don't want to sound callous': Why base your Social Security claim on life expectancy? We could die at any time.

By Quentin Fottrell

'The actual date of death ultimately affects only the surviving beneficiaries'

"An eventual date of death should not be used to judge the claiming date." (Photo subject is a model.)

Dear Quentin,

The letter about the man whose brother died at age 70 after receiving only one month of Social Security benefits misses the larger point ("It's heartbreaking: My brother claimed Social Security at 70. He died from cancer after one payment. Why wait to claim?").

Whether delaying benefits until age 70 was a wise decision is not changed by the fact that he died shortly thereafter. From the outset, his decision to delay included the risk that he might never live long enough to collect - or might collect very little.

The fact that he lived to age 70 also demonstrates that he was able to support himself throughout his 60s without relying on Social Security. In return for delaying benefits, he spent those years with the knowledge that he would live well into his 80s or beyond.

I don't want to sound callous, but as events turned out, he never needed the higher benefit. Social Security is fundamentally a safety net, not a personal retirement account. Congress could, in theory, redesign it as a mandatory retirement savings program.

But that is not how Social Security currently operates. For that reason, lamenting the benefits he never received after his death is, in my view, misplaced. Those benefits no longer had any value to him and nobody knows when they'll die.

Consider the alternative. If this had been a personal IRA instead of Social Security, and he had chosen to delay withdrawals until age 70, the remaining balance would almost certainly have passed to his heirs after his death. That doesn't happen with Social Security.

The key point is that no one knows in advance when they will die. That uncertainty exists whether a person claims benefits at 62, at full retirement age, or at 70. Therefore, an eventual date of death should not be used to judge the claiming date.

The decision should be evaluated based on the information available at the time. The actual date of death ultimately affects only the surviving beneficiaries, if any, and the financial obligations of the U.S. government - not the logic of the decision itself.

Regular Reader

Related: 'The numbers don't lie': If I had invested my Social Security in the S&P 500 I'd have $4 million. Is the system broken?

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

Objectively, we can pick apart other people's arguments, especially when it comes to when to claim Social Security, but we can allow him some grace for 'what ifs.'

Dear Reader,

I believe we're all on the same page.

Social Security is an insurance program, not a private retirement account. All the money you contribute stays in the pot, if you don't use it up. Whether or not you choose to claim at 62 or 70 or somewhere in between should be based on your projected longevity. Be prepared to make it past your late 70s if you claim at your full retirement age (67) instead of 62. And hope you live beyond your early 80s if you claim at 70 instead of 67. If your parents lived into their 90s, you may be better off waiting.

The brother of the man who passed away when he was 70, having only claimed one Social Security check, was lamenting how he could have used that money to fund his retirement. Our response to other people's stories is shaped by our own experiences. The reader felt his brother got the short end of the stick, but he did not appear to be blaming anyone for that except fate itself - even if, yes, he gave the government side-eye for tempting them to wait. But no one would wait if there wasn't a larger check in it for them.

The reader felt his brother got the short end of the stick, but he did not appear to be blaming anyone except fate itself.

Think about it another way: The letter writer wanted the best for his brother, and it's quite possible that he is still grieving his absence. He may always grieve his absence. So his lament that his brother did not get the best out of Social Security is not a decision based on actuarial tables - it's also based on emotion and the prospect of what might have been. Objectively, we can pick apart other people's arguments, especially when it comes to when to claim Social Security, but we can allow him some grace for "what ifs."

The Social Security Administration aims to ensure that - whether you claim at 62 or 70 - it's a wash, all things being equal, of course. "Benefits received prior to reaching the FRA are actuarially reduced for early retirement," according to this policy brief. "These reductions are permanent and are designed to ensure that lifetime benefits are approximately equivalent, on average." But the longer you live, the more likely you will surpass the amount you would receive upon claiming early.

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Longevity is not just a family affair

Life isn't fair, and longevity is not purely a family affair. People who have more resources are likely to live longer. As this study illustrates, gains in life expectancy have not been shared equally. Between men born in the 1930s and those born in the 1960s, those in the highest-income groups are projected to gain seven to eight years of life expectancy after age 50, while those in the lowest-income groups gain little or nothing. "These gains are accumulating mostly to those at the top of the income distribution," the study said.

Because higher-income individuals live longer, they are more likely to benefit from Social Security and Medicare for decades, with the gap in lifetime government benefits between the highest- and lowest-income men to increase by more than six figures. As a result, raising the full retirement age or changing the benefit formula - by updating cost-of-living adjustments or raising the payroll-tax cap - would only have a "fairly small" effect on the progressivity of Social Security, the above study's researchers noted.

The real challenge is not deciding at what age to claim Social Security, but to make the decision and fully commit to it.

We've long known that wealthier people live longer. The Brookings Institution, a social-sciences and economics think tank in Washington, also argues that the gap in life expectancy between high- and low-income Americans has widened dramatically, raising concerns about the fairness of some proposed Social Security reforms. While wealthier Americans have experienced substantial gains in longevity over recent decades, lower-income Americans have seen little or no improvement.

The real challenge is not deciding at what age to claim Social Security benefits, but to make the decision and fully commit to it, whatever happens. We don't know how much in savings the 70-year-old man had, but we do know that he had enough money to live on in order to delay taking Social Security. So for him, as you suggest, it was a win-win for the insurance program, even if it was a loss of Social Security checks for him personally. Choosing to take Social Security at 62 versus 70 is a roll of the dice.

Don't miss: 'I'll happily wait': Does delaying Social Security make sense for high earners like me?

By emailing your questions to The Moneyist or posting your dilemmas on The Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.

More columns from Quentin Fottrell:

I'm 67 with a $140,000 pension. Should I wait until 70 to claim Social Security so my wife gets more?

'I claimed Social Security at 62': At 76, I'm working at Walmart. Why do I still owe payroll taxes?

'I was shoveling sidewalks at 8 years old': I'm a 73-year-old boomer dad with two kids. Here's what I teach them about finance

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-Quentin Fottrell

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07-17-26 1000ET