Social security decisions are among the most complex and impactful choices seniors must make. The most critical decision revolves around “when” to take your benefits: “early” (at age 62 when you get reduced benefits); at “full retirement age” (around 68 now); or delaying until the last possible moment (age 70,when you must start taking benefits).

Then throw in a “double-decision” factor as spouses decide whose benefits should be taken first, and the impact of those decisions on the benefits given to a surviving spouse, and I promise you there’s a minimal chance that you’ll get it right. The wrong decision will be costly.

While I’ve written about this decision before, the National Bureau of Economic Research just published a paper that puts numbers around the potential costs of making a wrong decision. The research paper “How Much Lifetime Social Security Benefits Are Americans Leaving On the Table?” gives a shocking answer: “Optimizing the claiming decision would produce a 10.4% increase in the typical worker’s lifetime spending capacity.”

Or put it another way, the research says that for workers currently between the ages of 45 and 62, their “sub-optimal claiming decisions (ie., claiming too soon) will cost them in excess of $180,000 in the present value of household lifetime discretionary spending.

One of the authors of the study, famed economist Laurence Kotlikoff (who is also the author of the best-selling Social Security: Get What’s Yours), has been trying to get this message across for years. Now theis study quantifies the true cost of the claiming errors.

When to claim Social Security is not a decision to be made based on emotion – worrying that you’d better get the money now while you can! It is not about a bet against your longevity or the full funding of Social Security. Instead, it is a multi-dimensional financial calculation that requires sound advice – especially if you are part of a two-income couple.

When to Claim
The basic rule is to wait as long as you can to claim your benefits. It’s that simple: Don’t claim early!

Claiming before your full retirement age permanently reduces your basic benefit. For example, if your birthday is 1960 or later, your full retirement age is 67. If you start taking benefits early at age 62, a $1,000 benefit would be cut to $700 – a 30% benefit reduction that lasts your lifetime!

Why wait until 70 to claim? For every year you delay you’ll see a roughly an 8% a year increase in basic benefits (plus an additional increase for any cost-of-living increases in the interim) until you must claim at age 70. That larger base check means much larger dollar amounts for future COLA increases.

Since Social Security is likely to be your only inflation-adjusted income in retirement, it simply makes sense to wait as long as possible to get the largest base check – even if it means withdrawing more from your IRA while you delay, or working part time during those years until you reach age 70.

Getting Help with Complicated Decisions
There are long odds against getting correct help from Social Security – even if you get through to them in person or on the phone. Their errors are costly to your retirement, and are unlikely to be reversed if you find out too late.

I always refer readers to Kotlikoff’s website: www.MaximizeMySocialSecurity.com. There, a complex multi-dimensional program will give you the correct answers to your own claiming decision, and it is especially useful in complicated marital claiming decisions. The $39 cost could save you hundreds of thousands of dollars over your lifetime. Their advisors will answer questions that might arise.

My columns about Social Security typically generate the most feedback and arguments from people who want their benefits cash in hand as soon as possible. If you have a terminal illness, that’s understandable. But others should look at the best possible outcome, not the worst. What if you beat the actuarial predictions and live longer than average? Then you win big because during your last years you have more inflation-adjusted money to live on after your other savings run out!

And, if you die sooner and don’t collect “enough,” I hope that’s your only regret at the end of your life.

When it comes to claiming Social Security, don’t make an emotional bet against yourself. It’s all in the math. And that’s The Savage Truth.