A reader writes in, asking:

“This might be a question other people have too, but it’s certainly on my mind: you’ve spoken a lot about social security bridges using TIPs. If I were to use a TIPS fund instead of individual TIPS bonds, and the start of the bridge is about 1-2 years away, would it be better to use a shorter duration fund like VTIP rather than an intermediate duration fund?”

With TIPS mutual funds rather than individual TIPS, in theory the idea is that the fund’s average duration should match the average timing of the cash outflows.

For example, if the first payment were 1 year from now and the last were 8 years from now, we’d want an average duration of 4.5 years: (1+2+3+4+5+6+7+8)/8 = 4.5.

But a key point here is that the duration of a bond fund will stay more or less constant, whereas we actually want the duration to decline over time, as the desired cash outflows come closer and closer to the present.

In our example above, after one year has elapsed, we’d want the average duration to be 4 years: (1+2+3+4+5+6+7)/7 = 4. Another year later, we’d want the average duration to be 3.5 years: (1+2+3+4+5+6)/6 = 3.5. And so on.

So, for the best match, we need to use two different funds and adjust the balance between them over time (i.e., shifting more toward the fund with the shorter duration) in order to keep the weighted average duration where we want it.

But at that point, it’s actually more work than just buying 8 individual TIPS all in one sitting to begin with. (With a ladder of individual TIPS, the work is all up-front. Once they have been purchased, you just let them sit there until they mature and you spend the money. And if we’re talking about a fairly short ladder such as an 8-year Social Security bridge, you’re only buying a handful of different bonds.)

So in short:

• In most cases, I’d suggest just buying the actual individual bonds. It’s usually going to be less work, and you’ll have a better match between cash inflows (from bonds maturing) and cash outflows (i.e., spending the money).
• If we’re talking about a situation where you don’t have access to individual bonds (e.g., we’re talking about an employer-sponsored retirement account that provides access to TIPS funds but not the ability to buy individual bonds), then I’d follow the approach described above with a shifting allocation between two different funds.
• And if we’re talking about a situation where we’re placing a very high premium on simplicity rather than on risk mitigation, I’d just buy a fund that has a shorter duration than the current average duration of the cash flows, to account for the fact that the average duration of the cash flows will be declining over time. But it would be important to recognize that that isn’t a perfect fit, because the duration will currently be too short, and toward the end it will be too long.

A reader writes in, asking:

“Could you please clarify Morningstar’s new findings from Jason Kephart that delaying social security until age 70 while using one’s retirement portfolio may not be the optimal approach. Confusing after years of reading research advising of benefits to use portfolio to cover bridge from start of retirement to age 70 for highest income person.”

For reference, for anybody who hasn’t encountered it yet:

• You can download the actual paper here.
• Here’s an article summarizing the Social Security-related findings in the paper.
• And here’s an interview discussing those findings as well.

I would say that nothing in the Morningstar paper, as it relates to Social Security, should be surprising. However, one of the key tables (exhibit 1 in the paper, which shows up again later as exhibit 19, and which also appears in the article linked above) is causing some confusion, in particular due to using the term “bridge” in a way that is different than what is typical.

What’s a Social Security Bridge?

Typically, a Social Security “bridge” refers to allocating a part of the portfolio to some fixed-income product (most often, a TIPS ladder), to satisfy the extra level of spending that is necessary until Social Security kicks in. For example, you retire at age 62, but delay Social Security until age 70. And you buy an 8-year TIPS ladder (your “bridge”) that will provide an annual amount of spending during those 8 years of delay that is equal to what your Social Security payment would have been.

However, in the table in question, when the authors use the term “Social Security at 70 w/ Bridge” what they mean is a case in which something external to the portfolio performs the role of a bridge. In other words, this is essentially a “delay Social Security to 70 by working part-time until 70” strategy.

And what they find about that strategy is that it results in a higher amount of lifetime spending (and a higher combined “lifetime spending plus ending portfolio balance”) than a strategy of stopping work at 67 and filing for Social Security at 67. That’s pretty intuitive and uncontroversial. If you work longer, you’ll be able to spend more per year in retirement.

Delaying Filing, While Spending from Savings

The title of the interview above is, “Maybe You Shouldn’t Delay Taking Your Social Security Benefits After All.” The sub-headline states, “New Morningstar research suggests that in some cases, the advantage of delayed filing may be overstated.”

Both of those statements are factually true. Some people shouldn’t delay. And sometimes the benefit of delaying is overstated. (See for example, anybody who suggests that you get an 8% return when you delay.)

But I think it’s still very fair to say that most people should delay, and this paper doesn’t really pose a major challenge that assertion.

The big point that those two headlines are getting at is the following finding:

• In their “base case” scenario, they’re assuming a person retiring at 67, filing for Social Security at 67, and spending $73,000 in the first year of retirement, using a 60% stock, 40% bond portfolio.
• When they changed the assumption to retiring at 67 and filing for Social Security at 70 (thereby needing to spend more from the portfolio during those first 3 years), the spending level went up by ~5.5% (from $73,000 to $77,000), but the median ending portfolio value (at the end of the 30-year simulated retirement) went down by ~13.5%.

So the case they’re making is that if you care more about the ending portfolio value than about spending level, you would want to file earlier rather than later.

The result they find shouldn’t surprise you, when you look carefully at the assumptions. Specifically, they’re assuming spending from the 60/40 portfolio in order to fund the Social Security delay. In other words, stocks make up a major part (60%) of what they are assuming is given up, in exchange for more Social Security. And when you give up the risky asset with the high expected returns, in order to get more Social Security (i.e., a very safe asset), you get a higher level of safe spending, and a lower portfolio balance after 30 years. That’s exactly what we should expect.

For some people, that’s a good tradeoff. For others, it isn’t.

But before deciding that you shouldn’t delay Social Security, we have to take the analysis one step further. We have to look at (what is usually meant by) a Social Security bridge strategy, in which you specifically use fixed-income assets in order to fund the additional level of spending from the portfolio that’s necessary for the years of delay. The paper doesn’t look at that question specifically. But when that question is addressed in other research, what we typically see is that trading bonds for Social Security results in, for most people, an increase in the total available dollars over their lifetime (i.e., an increase in spending, an increase in ending portfolio balance, or some combination of the two).

Other Relevant Assumptions

Before closing, there are two additional very important assumptions in the paper. Neither is a flaw, as any model must make simplifying assumptions. But they’re both relevant in terms of the outcome here.

First, the paper is not considering the interplay of benefits for a couple (i.e., spousal and survivor benefits, as applicable). When we do consider those, what we see for married couples is that the case for the higher earner in the couple to delay is considerably stronger than for an unmarried person, and the case for the lower earner to delay is considerably weaker than for an unmarried person.

Second, the paper assumes a fixed rate of inflation (2.3%) per year. One of the major benefits of Social Security (and thus one of the benefits of maximizing your Social Security by delaying) is that it adjusts each year based on inflation. In other words, delaying Social Security gives you some additional protection against inflation risk. And the model in the paper isn’t accounting for that, because it’s assuming there is no inflation risk (i.e., fixed inflation).

Again, to be clear, I don’t think either of the above is a flaw of the paper. It’s just important to be aware of what assumptions are being used in the model before you take the resulting conclusions and apply them to your own personal financial planning.

On January 5, President Biden signed into law the Social Security Fairness Act of 2023. (That’s not a typo. The bill was originally introduced in the House in January 2023, where it basically just sat around until the House passed it in November 2024, the Senate passed it in December 2024, and the President signed it into law in January 2025.)

The Act does two things:

• It eliminates the Windfall Elimination Provision (WEP) which previously had the effect of reducing a person’s own primary insurance amount if they receive a pension from work they did that was not covered by Social Security tax.
• It eliminates the Government Pension Offset (GPO), which previously had the effect of reducing a person’s benefit as a spouse or surviving spouse if they receive a government pension from work they did that was not covered by Social Security tax.

And, to be clear, the Act is very straightforward in how it achieves those two effects. It literally just removes the relevant provisions from the Social Security Act itself. WEP and GPO are simply gone from the law. So there are no tricky exceptions or anything like that. There is no scenario in which the WEP or GPO will apply to anybody going forward.

Retroactive Effective Date

One strange aspect of this situation is that the Act is effective for any benefit months beginning in January 2024 or later. For a law that was originally introduced in January of 2023, that makes a lot of sense. But with it now being passed in 2025, that means the SSA will have to implement the law retroactively.

They’re aware of this, and they’re working on it. If you have already filed for your own retirement benefit or a benefit as a spouse or surviving spouse, and you believe that the benefit(s) in question should now be increased, there’s no need for you to do anything just yet (provided that the SSA already has your current mailing address and direct deposit information). Give the SSA some time to do what they need to do.

It’s a different situation though for anybody who did not file for a spousal or survivor benefit at all, because with GPO in place that benefit would have been reduced all the way to zero. The SSA isn’t going to “turn on” a benefit that nobody ever filed for. So anybody in that situation should go ahead and file for the spousal or survivor benefit in question (unless, for example, you’re younger than full retirement age and are intentionally choosing to wait to file for that benefit).

Calculator and Book Updates

The Open Social Security calculator has already been updated. I’m working on a 2025 update to Social Security Made Simple as well, but that will take more time.

The following is an excerpt from my book Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less.

Even if you are married, the place to start when trying to figure out when to claim Social Security is with a solid understanding of the (less complicated) analysis for unmarried retirees.

And before we go any further, let’s make sure we’re on the same page about an important point: the decision of when to retire is separate from the decision of when to claim Social Security benefits. For example, depending on circumstances, you might find that it makes sense to retire at a given age, yet hold off on claiming Social Security until a later date — maybe even several years later.

The earlier you claim Social Security, the less you’ll receive per month. For example, the following table shows how retirement benefits are affected by the age at which you first claim them:

Background: your “primary insurance amount” (PIA) is the amount you would receive per month if you claimed retirement benefits at your “full retirement age” (FRA).

In other words, by waiting until age 70 rather than claiming as early as possible at age 62, you can increase your monthly benefit amount by roughly three-quarters. Of course, by waiting, you decrease the number of months in which you’ll be receiving a Social Security check.

So how can you tell if the trade-off is worth it? One way to compare two possible ages for claiming benefits is to compute the age to which you would have to live for one strategy to become superior to the other strategy. Another way to analyze the decision is to compare the payout you get from delaying Social Security to the level of income you can safely get from other retirement income sources.

Computing the Breakeven Point

EXAMPLE: Alex and Bob are both retired and unmarried. Both are age 62, both have a full retirement age of 67, and both have exactly the same earnings history. In fact, the only difference between the two is that Alex claims his retirement benefit at age 62, while Bob waits all the way until 70. Even though Alex claims benefits at age 62, he doesn’t need to spend the money right now, so he keeps it in his savings account, where it earns a return that precisely matches inflation.

By age 70, because he has been receiving benefits for eight years, Alex is far better off than Bob. However, starting at age 70, Bob starts to catch up (because he’s receiving a monthly benefit equal to 124% of his primary insurance amount, as compared to Alex who is receiving a monthly benefit equal to 70% of his primary insurance amount).

In the end, Bob’s cumulative benefit surpasses Alex’s cumulative benefit at age 80 and 5 months. From that point onward, Bob’s lead over Alex continues to grow.

The takeaway: for an unmarried retiree, from a breakeven perspective, if you live to roughly age 80.5, you will have been better off claiming benefits at age 70 instead of claiming as early as possible at age 62.

According to the Social Security Administration, the average total life expectancy for a 62-year-old female is 84. For a male, it’s 81. In other words, from a breakeven perspective, most unmarried retirees will be best served by waiting to take their retirement benefit.

Comparing Social Security to Other Income Options

When you delay Social Security, you give up a certain amount of money right now (i.e., this month’s or this year’s benefits) in exchange for a stream of payments that will increase with inflation for the rest of your life.

Take, for example, somebody with a full retirement age of 67. If her benefit at full retirement age would be $1,000 per month, her benefit at age 62 would be $700 per month, and at age 63 it would be $750 per month.

Therefore, waiting from age 62 to age 63 is the equivalent of paying $8,400 (that is, $700 forgone per month, for 12 months) in exchange for a source of income that pays $600 per year (that is, a $50 increase in monthly retirement benefit, times 12 months per year), adjusted for inflation, for the rest of her life.

Dividing $600 by $8,400 shows us that delaying Social Security retirement benefits from age 62 to 63 provides a 7.14% payout. Let’s see how that compares to other sources of retirement income.

A single premium immediate lifetime annuity is essentially a pension that you can purchase from an insurance company. With such an annuity, you pay the insurance company an initial lump-sum (the premium for the policy), and they promise to pay you a certain amount of income for the rest of your life. In other words, such annuities are a source of income similar to Social Security.

As of this writing, according to the website immediateannuities.com (which provides annuity quotes from multiple insurance companies), the highest payout available to a 63-year-old female on such an annuity is 7.32%. For a male, the highest available payout would be 7.55%. As you can see, even at today’s high interest rates, the 7.14% payout that comes from delaying Social Security from 62 to 63 is still very competitive. A critical difference, however, is that the income from Social Security gets adjusted upward over time to keep up with inflation, whereas the income from these annuities would be fixed.

Alternatively, we can compare the payout from delaying Social Security to the income that you can safely draw from a typical portfolio of stocks and bonds. Several studies have shown that, historically in the U.S., retirees trying to fund a 30-year retirement run a significant risk of running out of money when they use inflation-adjusted withdrawal rates greater than 4%. And it’s worth noting that even a 4% withdrawal rate isn’t a sure bet going forward, given that the studies show 4% to be mostly safe in the past, which is a far cry from completely safe in the future.

In other words, for each dollar of Social Security you give up now (by delaying benefits), you can expect to receive a greater level of income in the future than you could safely take from a dollar invested in a typical stock/bond portfolio.

A similar analysis can be performed for each year up to age 70, and the conclusion is the same: delaying Social Security benefits can be an excellent way to increase the amount of income you can safely take from your portfolio.

EXAMPLE: Daniel is retired at 62 years old. His full retirement age is 67. He has $50,000 of annual expenses and a $600,000 portfolio. He is trying to decide between claiming benefits as early as possible at age 62 or spending down his portfolio while he holds off on claiming benefits until age 70.

Daniel’s primary insurance amount (the amount he’d receive per month if he claimed his retirement benefit at full retirement age) is $2,500, which means he would receive:

• $1,750 per month ($21,000 per year) if he claimed benefits at age 62, or
• $3,100 per month ($37,200 per year) if he claimed benefits at age 70.

If Daniel claims his retirement benefit at age 62, he’ll have to satisfy $29,000 of expenses every year from his portfolio (because Social Security will only be satisfying $21,000 out of $50,000). That is, he’ll be using a 4.83% withdrawal rate ($29,000 divided by his $600,000 portfolio) starting at age 62. That’s a higher withdrawal rate than most experts would recommend.

Alternatively, if Daniel delays Social Security until 70, he’ll have to satisfy annual expenses of $12,800 (i.e., $50,000, minus $37,200 in Social Security benefits), plus an additional $37,200 for each of the eight years until he claims Social Security.

If Daniel allocates $297,600 (that is, $37,200 x 8) of his $600,000 portfolio to cash or something else very low-risk (in order to satisfy the additional expenses for those eight years), that leaves him with a typical stock/bond portfolio of $302,400. With a portfolio of $302,400 Daniel can satisfy his remaining $12,800 of annual expenses using a withdrawal rate of just 4.23%.

In effect, Daniel is spending down a portion of his portfolio in order to purchase additional Social Security benefits in the amount of $16,200 per year, starting at age 70. By doing so, he’s reduced the withdrawal rate that he’ll need to use from his portfolio for the remainder of his life, thereby reducing the probability that he’ll run out of money. In addition, if Daniel’s portfolio performs very poorly and he does run out of money, he’ll be much better off in the wait-until-70 scenario than in the claim-at-62 scenario, because he’ll be left with $37,200 of Social Security per year rather than $21,000.

In short, the idea here is to separate Daniel’s total $50,000 annual spending into two segments:

1. $12,800 that will come from the portfolio every year, for the duration of his retirement, and
2. $37,200 that will come from the portfolio for the first 8 years and that will come from Social Security for the remainder of his life.

And then we separate his portfolio into two corresponding segments:

1. One portion (with a typical long-term oriented allocation) that will satisfy $12,800 per year for his life, and
2. One portion (allocated to something very safe such as a ladder of Treasury Inflation-Protected Securities) that will satisfy the additional $37,200 needed per year for the first 8 years.

Reasons Not to Delay Social Security

Of course, there are circumstances in which it would not make sense for an unmarried person to delay taking Social Security.

First and most obviously, if your finances are such that you absolutely need the income right now, then you have little choice in the matter.

Second, if you have reason to think that your life expectancy is well below average, it may be advantageous to claim benefits early. For example, if you have a medical condition such that you don’t expect to make it past age 64, it would obviously not make a great deal of sense to choose to wait until age 70 to claim benefits.

Third, the higher market interest rates are, the less attractive it is to delay Social Security. Most specifically, we are concerned with the interest rates on inflation-adjusted bonds known as Treasury Inflation-Protected Securities (TIPS), because they are the fixed-income investment that is most similar to Social Security in that they are inflation-adjusted and guaranteed by the federal government.

Simple Summary

• For unmarried retirees, from a breakeven perspective, you’ll be best served by waiting until age 70 to claim benefits if you expect to live to age 80 and 5 months. (And, for reference, the average total life expectancy for a 62-year-old female is 85.1. For a male, it’s 82.3.)
• For unmarried retirees, on a dollar-for-dollar basis, the lifetime income you gain from delaying Social Security is generally greater than the level of income you can safely get from other sources. As a result, delaying Social Security can be a great way to increase the amount you can safely spend per year. (Or, said differently, it can be a great way to reduce the likelihood that you will outlive your money.)
• The shorter your life expectancy and the greater the available yield on inflation-protected bonds, the less desirable it is to delay claiming Social Security benefits.

The following is an adapted excerpt from my book Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less.

As with the when-to-claim decision for an unmarried person, the decision for married people depends largely on life expectancies. But in this case, each spouse’s decision depends on both spouses’ life expectancies.

When Should the High-PIA Spouse Claim Benefits?

As we discussed in the previous chapter, delaying Social Security is akin to buying an inflation-adjusted lifetime annuity—one that’s a heck of a deal for many people because, relative to annuities you can buy in the private marketplace, it comes with a comparable payout plus an inflation adjustment.

In most cases, for the spouse in a married couple who has the higher of the two primary insurance amounts, delaying Social Security is just like that, but better. In addition to an unusually high payout and unusually low credit risk, the annuity now comes with the possibility of a survivor benefit as well.

EXAMPLE: Allan and Liz are married, both age 62. Liz’s career earnings are rather low, because she spent many years out of the paid workforce doing volunteer work and caring for their children. As a result, Allan’s primary insurance amount is much larger than Liz’s. After either Allan or Liz dies, the surviving spouse will be receiving an amount equal to Allan’s benefit. (If Liz is the surviving spouse, it will be partially in the form of a widow’s benefit.) As a result, if Allan chooses to hold off on claiming his own retirement benefit, he increases not only his own benefit while he’s alive, but also Liz’s widow’s benefit in the event that he predeceases her.

In short, the decision for the higher-earning spouse includes the same considerations as for an unmarried retiree, with one major modification: the life expectancy in question is no longer just the person’s own life expectancy, but rather the joint life expectancy of the two spouses (because delaying benefits will increase the amount paid out as long as either spouse is alive).

In other words, from a breakeven perspective, for it to be advantageous for the higher-earning spouse to delay his/her retirement benefit, only one spouse needs to make it to the breakeven point. As you can imagine, this often means that it’s a very good deal for the high-PIA spouse to wait until age 70 to claim retirement benefits.

When Should the Low-PIA Spouse Claim Benefits?

For the spouse with the lower primary insurance amount, the decision of when to claim benefits works in much the same way as the decision for an unmarried person, but with one major modification: it’s somewhat less advantageous for the low-PIA spouse to delay benefits, because doing so only increases the amount the couple will receive while they’re both still alive.

For example, if we look back at Allan and Liz from above, having Liz hold off on claiming Social Security does not increase the amount Allan will receive at any point. And it only increases the amount Liz will receive while Allan is still alive as well (because once Allan dies, Liz will begin receiving her widow’s benefit).

Simple Summary

• For married couples, both spouses’ respective life expectancies should be considered in each spouse’s claiming decision.
• It is usually advantageous to have the spouse with the higher primary insurance amount delay claiming his/her retirement benefit as long as possible, because doing so increases the amount the couple will receive as long as either spouse is alive.
• For the spouse with the lower primary insurance amount, there’s less to be gained as a result of waiting to claim benefits, because doing so only increases the amount the couple will receive while they’re both alive. (And in some cases there’s nothing to be gained from waiting beyond full retirement age, because spousal benefits do not continue to increase as a result of waiting past FRA.)

The following is an excerpt from my book Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less.

The size of your monthly retirement benefit depends on:

1. Your earnings history, and
2. How old you are when you first begin taking benefits.

But first we need to back up a step. In order to understand how Social Security benefits are calculated, you need to be familiar with two terms:

• “full retirement age” (FRA), and
• “primary insurance amount” (PIA).

Your full retirement age depends on the year in which you were born (see table below). Your primary insurance amount is the amount of retirement benefits you would receive per month if you started taking them at your full retirement age. As we’ll discuss shortly, your PIA is determined by your earnings history.

How Earnings History Affects Retirement Benefits

Your primary insurance amount is based on your historical earnings. Specifically, it’s based on your “average indexed monthly earnings” (AIME). Calculating your AIME is a five-step process.

1. Make a year-by-year list of your earnings, excluding any earnings for each year that were in excess of the maximum amount subject to Social Security tax.
2. Adjust your earnings from prior years to today’s dollars.
3. Select your 35 highest-earning years.
4. Add up the total amount of earnings in those 35 years.
5. Divide by 420 (the number of months in 35 years).

You do not actually have to do this calculation yourself. The Social Security Administration does it for you. It is, however, important to understand the concept, so that you can understand how your benefit is calculated.

Calculating Your Primary Insurance Amount

For someone becoming eligible for retirement benefits (that is, reaching age 62) in 2025, his or her primary insurance amount would be:

• 90% of any AIME up to $1,226, plus
• 32% of any AIME between $1,226 and $7,391, plus
• 15% of any AIME above $7,391.

Or, to put it in terms of annual income, if claimed at full retirement age, Social Security would replace:

• 90% of the first $14,712 of average annual wage-inflation-adjusted earnings, plus
• 32% of average annual wage-inflation-adjusted earnings from $14,712 to $88,692, plus
• 15% of average annual wage-inflation-adjusted earnings from $88,692 to $164,268.

Two noteworthy takeaways here are that:

1. Social Security replaces a higher portion of wages for lower-earning workers than for higher-earning workers, and
2. There’s a maximum possible Social Security retirement benefit. (Few people reach that maximum though, because doing so would require that you earn the maximum earnings subject to Social Security tax for 35 different years.)

If You Worked Fewer than 35 Years

If you have fewer than 35 years in which you earned income subject to Social Security taxes, the calculation of your average indexed monthly earnings will include zeros. For example, if you worked for 31 years, your AIME calculation would include those 31 years of earnings, as well as 4 years of zeros.

As a result, working additional years would result in those zero-earnings years being knocked out of the calculation and replaced with your current earnings. The result isn’t going to make you rich, but it’s worth including in your list of considerations when deciding when to retire.

How Age Affects Retirement Benefits

If you claim your retirement benefit prior to full retirement age, it will be reduced from your primary insurance amount by ⁵/₉ of 1% for each month (up to 36 months) prior to full retirement age. This works out to a reduction of 6.67% per year. For each month in excess of 36 months, the reduction is ⁵/₁₂ of 1% (or 5% per year).

EXAMPLE: Allison was born in 1962, so her full retirement age is 67. Her primary insurance amount is $2,000. If she claims retirement benefits at age 65 (24 months prior to FRA), her monthly benefit would be $1,733.33, calculated as:

• Her PIA of $2,000 per month, minus
• ⁵/₉ of 1% x 24 months x $2,000.

If Allison decides instead to claim at age 62 (60 months prior to FRA), her benefit would be $1,400 per month, calculated as:

• Her PIA of $2,000 per month, minus
• ⁵/₉ of 1% x 36 months x $2,000, minus
• ⁵/₁₂ of 1% x 24 months x $2,000.

If you wait until after full retirement age to claim your retirement benefit, the amount you receive will be greater than your primary insurance amount. The increase is ²/₃ of 1% for each month you wait beyond full retirement age (up to age 70, beyond which there is no increase for waiting). This works out to an increase of 8% per year.

EXAMPLE: Alan was born in 1960, so his full retirement age is 67. His primary insurance amount is $2,000. If he waits until age 70 (that is, 36 months after FRA) to claim his retirement benefit, he will receive $2,480 per month, calculated as:

• His PIA of $2,000 per month, plus
• ²/₃ of 1% x 36 months x $2,000.

In short, the interaction between the size of your retirement benefits and the age at which you first claim that benefit looks like this:

Adjusting Benefits for Inflation

Every year after you reach age 62, your primary insurance amount is adjusted to keep up with inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When your PIA is adjusted upward for inflation, it increases not only your retirement benefit, but also any other benefits that are based on your PIA (e.g., your spouse’s spousal benefits or widow/widower benefit if your spouse should outlive you).

A common misconception is that you must have already filed for your benefit in order to get the cost-of-living adjustment in a given year, but that is not the case. The cost-of-living adjustment is applied to your PIA regardless of whether or not you have filed for benefits.

Simple Summary