this post was submitted on 30 Jun 2025
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Should you claim your pension early or wait? (www.mpg.de)
submitted 2 days ago by [email protected] to c/[email protected]
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In the U.S., the monthly payments increase the longer one works—researchers have now examined whether delaying retirement is financially worthwhile.

  • Earlier retirement: Researchers have analyzed data from the United States to examine whether retiring earlier is worthwhile.
  • Findings: The study shows that the financial risk of delaying retirement particularly affects men and low-income groups in the U.S.
  • Making the most of it: For sick individuals in the U.S., retiring early can help them receive some of the benefits they paid for—even if they do not have long to live.
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[–] [email protected] 2 points 2 days ago* (last edited 2 days ago)

That depends on a ton of factors such as:

  • financial situation
  • health situation
  • pension details
  • family situation (some pensions roll over to spouse, some don't)

Don't keep working if you don't need to, and don't take your pension until you actually need the money. When you should retire has less to do with your pension and more to do with the other stuff above.

Also, consider taking the pension in a lump sum, sometimes that's the better option. But do your research and strongly consider talking to a fee-only advisor, since they'll know what to look for.

[–] [email protected] 8 points 2 days ago (4 children)

Curious word choice. I know of no company still offering pensions, and I don't know anyone that has one. The article talks about social security, does that pass as a pension these days?

[–] [email protected] 1 points 2 days ago

I work at a fortune 250 company and we have a pension. I don't know if it's good or not as we also have a 401k, but we have it.

[–] [email protected] 1 points 2 days ago

Pensions are still a thing in some industries, and especially in government work

[–] [email protected] 1 points 2 days ago (1 children)

Although most Americans don't tend to refer to Social Security as a "pension", it does function very similarly to a "public pension", insofar as providing income during old-age as well as disability and survivorship benefits. And outside the context of government workers (eg state employees or teachers) who still have actually public pensions, I don't see it as confusing to refer to the publicly-administered Social Security system as the national pension system, even if not as extensive as other systems abroad.

This is especially true when comparing to "private pensions", which in the past might have referred to pensions operated by a private company and with whom a worker might have been a lifelong employee. But with that model mostly disappearing except for maybe railroads and certain other industries, the term can now reasonably refer to 401(k) plans, which are managed by the individual, and is more common than actual pensions from a private company.

So yeah, it's not colloquial American English, but I think personal finance circles would understand that "pension" can encompass a wide range of things.

[–] [email protected] 0 points 2 days ago (2 children)

It's not really a pension though. A pension is a retirement product based on how much was paid into it, and there's often an option to cash it out instead of taking distributions. Social Security is a welfare product that, while tied to how much you put in, provides more value to the poor vs the wealthy and there's no option to cash out.

The main similarity is that it pays out monthly once you start taking it, but it functions very differently. If you consider SS to be a pension, does that mean an annuity is also a pension? Because again, that's a very different product.

[–] [email protected] 4 points 2 days ago (1 children)

SS is not a welfare benefit. That is a lie the Republicans have been pushing for decades.

We pay our entire adult lives in order to get payout when we no longer work. It is meant to keep our elders out of poverty, not to line pockets of "welfare queens", despite what you might have been told.

As it stands now, I'm told I'll only get 70% of what i am due because of decades of government stealing the money and calling it a loan.

[–] [email protected] -2 points 2 days ago

It is meant to keep our elders out of poverty

Yes, the definition of a "welfare program" is something that keeps people out of poverty. According to Wikipedia:

Welfare spending is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter.

That pretty closely matches my understanding of what Social Security is. Here's the way benefits currently are calculated:

  1. initial amount is calculated as 90% of the first $X you make, 32% of your next $Y, and 15% up to the limit
  2. when you start taking benefits - you get 75% at 62, 100% at 67, and 124% at 70
  3. extra if you're married

Poorer people will:

  • get a bigger share of their working-years income
  • take SS later - so monthly checks will be larger

So yeah, it's a forced contribution to a welfare program, but the welfare program is not as generous as others because it also functions as a retirement program for middle class people.

I think we should take this to its logical conclusion:

  • don't provide benefits for those who don't need it (i.e. >= 4x the poverty line)
  • base benefits on need, not how much you paid in - the less you earn, the more you get
  • eliminate age restriction - allow poor people (working or not) to get benefits

I'm thinking it could be used to fund a Negative Income Tax (similar to Universal Basic Income), where if you report income under some amount, you get Social Security benefits, regardless of age.

I’m told I’ll only get 70% of what i am due because of decades of government stealing the money and calling it a loan.

Then you're reading a bit too much into what clickbait articles say. The actual fact is that Social Security will be underfunded if nothing changes, and there's plenty of time to make changes.

[–] [email protected] 2 points 2 days ago (1 children)

SS is a defined benefit administered (and guaranteed) by an independent agent. Pension is a defined benefit administered by employer (or PBGC). Seems pretty similar to me.

Annuity is a defined contribution disbursed formulaically by a company you hired. The only similarity is the regular payment.

[–] [email protected] 0 points 2 days ago (1 children)

SS is a defined benefit

It's only defined once you start taking it, until then, all we have are estimates. It's somewhere in the middle of "defined benefit" and "defined contribution."

Pension is a defined benefit administered by employer (or PBGC)

It can be defined benefit or defined contribution, depending on how it's configured. Your benefits are directly calculated based on how much you put in, whereas Social Security benefits taper off the more you put in, and after a certain point you can't pay any more in.

A pension pays out assets it has, Social Security pays out based on policy. A pension can go bankrupt if it's poorly run, Social Security instead operates based on law (which can be changed), which is technically unrelated to tax receipts and fund performance.

They're quite different systems IMO, and the main similarity is the regular payment, hence why I brought up annuities.

[–] [email protected] 1 points 2 days ago (1 children)

The main difference is who bears the risk. For pensions, it's the employer, who has to make extra payments if the pension fund falls behind it projected obligations, or surrender its management to PBGC. That open-ended risk is why most companies have abandoned pensions. For SS, it's the government (although they do have the power to change their legal obligation). For annuities, it's the recipient, who will just get less money if the annuity's investments underperform during the accumulation phase.

[–] [email protected] 1 points 2 days ago

To me, that's a pretty big difference between each product.

[–] [email protected] 6 points 2 days ago

A lot of union jobs have optional pensions as do a lot of government jobs. As a total number of jobs not much but enough to matter.