Veritas propter investigationem [Truth through research]
TitleUnusual Social Security Claiming Strategies: Costs and Distributional Effects (2009)
AuthorsAlicia Munnell
 Steven Sass
 Alex Golub-Sass
 Nadia Karamcheva
InstitutionCenter for Retirement Research
TopicsSocial security
 Public pension reform
CountryUnited States
Date Published2009
Date posted on PR16 Sep 2014
Munnell, A Sass, S Golub-Sass, A Karamcheva, N, (2009). Unusual Social Security Claiming Strategies: Costs and Distributional Effects (2009) Center for Retirement Research,

PensionReforms’ summary and comments

The US Social Security age pension is a relatively flexible instrument.  The four key options available to those approaching the State Pension Age (now 66):

1.       Take a reduced pension from as early as age 62 or defer it to receive a larger pension from as late as age 70;

2.       ‘Free Loan’ in which an individual can claim benefits but repay them later and re-file at the later age.  No interest is charged on the amounts already received.

3.       ‘Claim and Suspend’ means an individual defers receipt if continuing to work or to allow a spouse to claim while the individual earns ‘delayed retirement credits’.

4.       ‘Claim Now, Claim More Later’ means a married individual (only the ‘marrieds’ can use this option) claims a spousal benefit while delaying claiming his own retired worker benefit in order to build up delayed retirement credits.


This 2009 report looks at the various options, their potential costs and the policy rationale for each.  This is in the context of a scheme that, according to many, will inevitably face cutbacks.


“This paper has examined three little-used provisions [items 2-4 above] that could potentially be used by households to increase their Social Security benefits and, thus, the costs to the system.”


The report concludes there is no clear public policy goal with either the ‘Free Loan’ or the ‘Claim Now, Claim More Later’ options:

“Each could cost up to about $10 billion annually.  And a significant share of the benefits would go to high-income households.  Moreover, the potential costs could rise in the future because the number of people who could take advantage of each strategy will grow as the population ages.”


As the State Pension Age increases, the number of potential beneficiaries of the ‘Free Loan’ option will increase because the reducing benefits will reduce the amounts that beneficiaries will need to repay.  The rise in Defined Contribution lump sum schemes will also allow future retirees greater financial resources to take advantage of these unusual features.


“In contrast, our analysis of the “Claim and Suspend” option leads to a different conclusion.  This strategy has a clear policy rationale.  The Senior Citizen’s Freedom to Work Act, which authorized its use, was designed to help people work longer. “Claim and Suspend” does just that. Individuals re-entering the workforce can use it to earn delayed retirement credits.  And one-earner couples can use it to initiate a spousal benefit while the primary earner continues to earn delayed retirement credits. And the roughly $0.5 billion estimated cost to Social Security is relatively modest.”


PensionReforms was unfamiliar with these three unusual benefit options.  They will, as the report notes, tend to be regressive on two fronts: the better off can afford to delay receipt of Social Security and, because of normally better mortality rates, will profit more in the long run from the higher pensions.  Also, there is an informational issue – the better-off are more likely to know how best to game their entitlements.


If they have a potential cost of $21 billion a year and no clear rationale, PensionReforms agrees they should be abolished. (File size 146 KB; 42 pp) 699