When's best time to stop the daily grind?

A senior couple on a laptop

TEXT OF STORY

Tess Vigeland: Dreaming of retirement? Yeah, me, too. But apparently, lots of folks are putting it off these days.

This week, the Census Bureau reported that one in four workers is still on the job after age 65. But there are those who choose to take their Social Security benefits early. That means less money per year, and some worry that early retirees could find themselves outliving their benefits.

Marketplace's John Dimsdale reports on a debate over whether to put early Social Security benefits further out of reach.


John Dimsdale: Don't call Richard Gottlieb a baby boomer. Born 12 days before Franklin Roosevelt's death, he lays a firm claim on being a war baby.

Richard Gottlieb: There's a difference. My class was very small in school. The next one swelled.

Gottlieb, who is a medical education consultant in New York City, turned 62 last spring and became eligible for early Social Security retirement benefits. He had a choice: Retire now and take monthly payments that are only three-fourths what they will be if he waits four years, or he could hold off and let his Social Security nest egg accumulate. For every year he waits, his lifetime payments go up roughly 7 percent.

It wasn't an easy decision for Gottlieb:

Gottlieb: I've lived longer than any other man in three generations of my family. Statistics don't mean anything for an individual, but I gave that some thought.

In the end, he chose to wait.

Gottlieb: I looked at what my income is likely to be and decided I was comfortable enough not to take the benefits at 62. And I guess I'll look at it on a year-to-year basis and make a determination.

Policymakers looking at the sustainability of the current retirement system are hoping baby boomers will follow Gottlieb's lead and hold off their retirement.

To help persuade them, Barbara Bovbjerg, a pension expert at the Government Accountability Office, thinks the age of eligibility for early Social Security should be gradually raised.

Barbara Bovbjerg: Doing that would encourage people to work longer. It would help the economy. It would help the Social Security trust fund. It would assure that people are better positioned when they do retire.

In a recent study for the Center for Retirement Research, pension consultant John Turner concludes the age for first Social Security benefits should be raised to 63-and-a-half.

John Turner: You know, when you think about when to retire, you need to have some guidelines. Sixty-two is the guideline the government gives, saying it's OK, we're going to give you benefits at that age. So there's a kind of seal of approval, a symbolic importance to the age.

But for many seniors, waiting for higher Social Security payments is not an option. They may be disabled or in a physically demanding job. That's why the senior citizens lobby AARP is not endorsing raising the age of eligibility.

At least not yet, says David Certner, the director of legislative policy.

David Certner: If you're sitting like I am in a nice, clean office, working another year is probably not as big a problem for people who have the kinds of jobs that are not really conducive to continuing to work into your 70's for that matter. That's the tension I think we see in this debate.

And remember, says Virginia Reno at the National Academy for Social Insurance, a lot of people choosing to take early benefits are already out of the workforce once they hit 62.

Virginia Reno: The more important thing than taking away the option to get benefits then would be to make sure people really understand what the trade-offs are. There may be a misguided notion that somehow they're missing something if they don't take benefits at the earliest age they can.

The Social Security Administration is in the middle of changing the age for retiring at full benefits from 65 to 67. As life expectancy increases and jobs become less physical, raising the age for early retirement may be next on the agenda.

In Washington, I'm John Dimsdale for Marketplace Money.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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