Framing effects in social security start dates

Social Security is an actuarially fair program, which means if you have an average life expectancy, it doesn’t matter when you start collecting benefits. You’re going to collect the same amount if you start at age 62, 65, or 70, and live an average lifespan. People collect more if they live longer or less if they die earlier.

Despite this fact, people can be influenced about when to start collecting benefits through particular messaging, according to three researchers. The trio tested a series of 10 frames using the behavioral economic concepts anchoring and framing. Interestingly, all of these various frames began with a short statement about the actuarially fair nature of Social Security, which appears to have been quickly overlooked.

The message that led to earliest start collection dates, a year earlier relative to the government’s current messaging, emphasized that early starters get less money, but that the “breakeven” age for people staring later was quite far down the line. For instance, the frame says that by delaying starting benefits from 62 to 63, you have to live “at least 15 more years in order to get back the $18,588.00 you forfeited by waiting one year.” In contrast, the latest benefit start dates came from messages emphasizing the gains that accompanied delaying collection and the consumption benefits of those extra dollars.

More on the experiment and findings is at the Rand Behavioral Finance Forum here.

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  • Justin Reckers, CFP®

    And if you are my age you should expect to get nothing so don’t waste your time, take it as early as possible. My Social Security annual statement comes with a disclaimer that they expect to pay me about 70% of the scheduled benefit I would otherwise be entitled to because the trust funds will be gone and benefits will be paid 100% from taxes collected. I will not be planning on receiving it. If I do, it will be spent on something frivolous. Sounds rational. Doesn’t it?

  • Dee

    I’m not counting on Social Security to be there either. This administration, as its predecessors has dropped the ball. Peter Orszag, former Director of the Office of Management and Budget under President Obama had some ideas for fixing Social Security that might have actually worked. Instead, they let him get away and now he’s at Citibank.