Lifespan is uncertain, even for well-informed individuals. Sha Jiang, Wenyun Zuo, Zhen Guo and Shripad Tuljapurkar show that this irreducible demographic risk increases with delayed pension claiming and hits male and low-income groups harder. Early claiming, often seen as suboptimal, may be a rational response to unavoidable uncertainty.
Most advice about claiming a Social Security old-age pension in the U.S. says: “Wait to claim, and you’ll receive higher monthly payments” (Meyer and Reichenstein, 2010). But there’s one crucial factor often left out of the conversation: no one knows how long they will live (Edwards and Tuljapurkar, 2005). This uncertainty, which we call demographic risk, fundamentally changes how we should think about retirement decisions.
In our recent study (Jiang et al., 2025), we show that this risk doesn’t go away, even for people who are well-informed and make rational plans. And importantly, we find that many people who claim their Social Security pension early, often seen as making a poor choice, may actually be acting in a very reasonable way.
The hidden risk of delaying benefits
At least in theory, Social Security pensions are designed to be actuarially fair: people who claim later get more per year but collect for fewer years. If everyone lived exactly to their average life expectancy, then claiming early or late would make no difference in lifetime benefits (Shoven and Slavov, 2014).
But no one lives exactly to the average, even among people with the same income, education, or health; lifespans vary widely, and that variation matters. We call this irreducible demographic risk: the uncertainty in how long you will live, even if you know everything else about your situation. Think of pension claiming like investing. Delaying can boost your monthly benefit, but it also means you’re betting on living longer. If you die earlier than expected, you may get little, or nothing at all.
We built a simplified model that captures the essential actuarially fair features of the U.S. Social Security system. To isolate the effect of lifespan uncertainty, we focused on two risks: dying before claiming and living only a short time after. We measured this using the coefficient of variation, the standard deviation divided by the mean. It captures how much lifetime benefits vary relative to the average, and helps compare risk across groups with different life expectancies. The result is clear: delaying increases financial risk, especially for males (Figure 1, left panel) or people with lower incomes (Figure 1, right panel).
Why early claiming can be a rational choice
About half of Americans start claiming a Social Security pension at the earliest possible age, 62 years. Some experts call this irrational but our model suggests otherwise. For people with limited savings or uncertain health, claiming early can help reduce risk. It ensures they receive at least some benefits, even if they don’t live long. Others may choose a middle ground, claiming a few years later to balance risk and return. There’s no one-size-fits-all answer. What matters is how much uncertainty you can afford to carry.
Using U.S. mortality data, we compared outcomes for people in different income groups. Those in the bottom 20% of income not only live shorter lives on average, but also face greater uncertainty in how long they will live (see the right panel of Figure 1). That means delaying benefits is riskier for them, because there’s a higher chance they won’t live long enough to benefit from the delay. Policies that encourage everyone to delay claiming may unintentionally harm those with fewer resources (Isaacs and Choudhury, 2017), by pushing them toward risk they cannot bear.
To ensure our results weren’t just a fluke, we tested them under a range of scenarios:
• People with different levels of risk aversion
• Couples with different age gaps and claiming strategies
• Analytical and simulation-based approach
No matter how we built the model, demographic uncertainty stayed front and center. Even rational, informed people face this unavoidable risk, and it gets larger the longer they wait to claim.
Policy implications: one size does not fit all
Many retirement planning tools and policies assume that people can plan based on average life expectancy. But our research shows that average predictions can be dangerously misleading, especially for those at the bottom of the income ladder. If policymakers want to support fair and effective retirement decisions, they must account for this irreducible risk. Encouraging delayed claiming across the board could widen existing inequalities in retirement outcomes.
You can save, plan, and optimize. But you can’t predict how long you’ll live, and that unpredictability has real financial consequences. For millions of Americans, especially those in poorer health or with lower incomes, claiming their Social Security pension early isn’t a mistake: it’s a rational response to risk. Understanding this can help us build more equitable and realistic policies for an aging society.
References
Jiang, S., Zuo, W., Guo, Z., & Tuljapurkar, S. (2025). When to claim a pension: the effect of uncertainty in ages at death. Genus, 81(5). https://doi.org/10.1186/s41118-025-00243-6
Edwards, R. D., & Tuljapurkar, S. (2005). Inequality in life spans and a new perspective on mortality convergence. Population and Development Review, 31(4), 645–674.
Shoven, J. B., & Slavov, S. N. (2014). Recent changes in the gains from delaying Social Security. Journal of Financial Planning, 27(3), 32–41.
Isaacs, K. P., & Choudhury, S. (2017). The growing gap in life expectancy by income: Recent evidence and implications for the social security retirement age. Congressional Research Service.
Meyer, W., & Reichenstein, W. (2010). Social security: When to start benefits and how to minimize longevity risk. Journal of Financial Planning, 23(3), 49–59.