Delaying Social Security until a later age can create a larger financial cushion

Many Americans who spend decades building retirement savings discover that drawing down those funds is harder than expected. Each withdrawal can feel like a step closer to exhausting the nest egg.

That unease appears widespread among people age 50 and older, according to Prudential Financial’s retirement survey, which points to both the emotional and financial difficulty of turning savings into dependable income.

Research from the National Bureau of Economic Research also suggests that the age at which benefits are claimed can shape long-term finances, not just the amount already saved.

Most older Americans say they are uneasy about using retirement savings

Prudential Financial surveyed 3,023 adults age 50 and older and found that 86% said they do not feel comfortable spending their retirement savings on things they enjoy.

Even among households with at least $500,000 in assets, reluctance remained high, with 61% saying they felt uneasy about discretionary spending.

The biggest concern was uncertainty about Social Security’s future, which 44% of respondents cited. Inflation followed at 42%, while healthcare and long-term care expenses were named by 34%.

Only 14% said they felt comfortable using savings each month, and two-thirds of respondents said they would prefer a guaranteed monthly payment for life rather than a lump sum.

Why waiting to claim Social Security can strengthen retirement income

The Social Security Administration increases a worker’s monthly benefit by two-thirds of 1% for each month they delay claiming after full retirement age. That works out to an 8% increase for each full year, with delayed retirement credits stopping at age 70.

For people born in 1960 or later, full retirement age is 67, leaving a three-year period in which those credits can keep building.

Claiming at full retirement age provides 100% of the earned benefit, while waiting until 70 can raise the monthly payment by roughly 24% over that amount.

For example, a worker entitled to $2,500 a month at full retirement age could receive about $3,100 by waiting until 70. That extra $600 can help cover fixed expenses such as housing and Medicare premiums, reducing the need to tap savings for routine costs.

Annual cost-of-living adjustments also widen the difference over time. The SSA notes that delayed retirement credits continue to build even if a worker stops earning wages after full retirement age.

A larger guaranteed check can change spending behavior in retirement

Economists at Boston University and the Federal Reserve Bank of Atlanta examined claiming patterns in the NBER research and concluded that more than 90% of workers ages 45 to 62 should wait until 70 to claim benefits, though only 10.2% do so.

Those who claim earlier than the optimal age give up a median of $182,370 in lifetime household discretionary spending. That helps explain why guaranteed monthly income carries so much weight in retirement spending decisions.

For workers whose health and household cash flow allow it, the delay period can be bridged with part-time income, planned portfolio withdrawals, or coordination with a spouse’s claiming strategy, according to Blanchett.

Prudential’s survey also found that respondents who had, or expected to have, guaranteed retirement income from a pension or annuity were 43% more likely to feel comfortable spending.

David Blanchett, head of retirement research at Prudential Financial, discussed that tension at a New York media event, according to Plansponsor.

If people can't enjoy their retirement savings, what was the point [of saving]?

The survey found that pre-retirees with a retirement plan were 56% more likely to spend comfortably, and those with a withdrawal strategy were 52% more confident.

How to estimate the Social Security gap before retirement

People nearing retirement can use the SSA’s online retirement estimator to calculate benefits at age 62, full retirement age, and 70 based on their earnings record. That estimate helps show how much of a household’s fixed expenses Social Security can cover and how much savings may still be needed.

The Employee Benefit Research Institute’s retirement confidence survey found that overall worker confidence declined by 6 points to 61%, the lowest level in nearly a decade. That drop adds to the urgency of figuring out guaranteed income before leaving the workforce.

Blanchett has argued that when retirees know their monthly Social Security amount, they can better measure the remaining income gap before drawing down savings. He says that clarity can separate purposeful spending from fear-driven restraint.

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