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Social Security is making an offer you should refuse. Famed economist and Social Security expert Larry Kotlikoff calls it a “massive con job.” And he explains that, like any con job, the offer is so enticing, it’s hard to pass up — until you do the math!

Here’s what’s happening. People who have decided they could afford to wait until age 70 to claim their maximum benefit are being greeted by an enticing offer from Social Security when they call to set up their direct deposits.

(You should contact Social Security two months before your 70th birthday to get the process started. Your first benefit check will be deposited the month after your 70th birthday, since Social Security pays one month in arrears.)

Now, many people are reporting that when they call to sign up, the Social Security representative presents an enticing offer: Sign up now (that is, before your 70 th birthday) and we will pay you a full six months in arrears in one lump sum!

However, accepting this offer permanently reduces your retirement benefit by 4% (half of the 8% of increased benefit you receive by delaying your retirement benefit by one year, which you can do between ages 67 and 70).

Still, with the average 70-year-old getting a benefit of at least $3,000 per month, that lump sum of $18,000 (six months times $3,000) is very tempting. You can use it to pay off credit card debt or pay down your mortgage. Of course, it will add to your taxable income — and could impact your Medicare premium two years down the road.

So why not accept this deal?

Kotlikoff ran the case of a worker with the average age 70 benefit — roughly $3,000 a month — through Maximize My Social Security. Yes, taking Social Security’s “generous” offer will put $18K in the worker’s pocket immediately. But it will reduce the value of his lifetime benefits by $32,000 — something Social Security won’t tell him. On balance, Kotlikoff warns, taking Social Security’s offer is no different from throwing away $14,000.

You can calculate the specifics for your own benefit at MaximizeMySocialSecurity.com, for just $49. This sophisticated and precisely accurate algorithm helps individuals — and spouses — decide on their family’s best claiming strategy. It will show the long-term impact of this seemingly simple decision.

So many people seem unaware of the importance of delaying. For every year you wait after your traditional full retirement age (now 67 for those born after 1960), you get an 8% increase in your base benefit. And then in subsequent years, you get an inflation-adjustment (COLA) increase that is intended to ensure your income keeps up with the rising cost of living.

Yet 26% of Americans first start taking Social Security at the earliest moment possible — when they reach age 62. Their benefit is reduced by about 30% from what they would receive at age 67. Perhaps because they can no longer work or believe their health situation will shorten their lifespan. Or they just don’t do the math of using savings first and claiming Social Security later.

Fewer than 10% of Americans wait until age 70 to claim that maximum benefit. Their monthly benefit will be 76% higher than those who claimed at age 62. And, again, that higher base benefit is critical for future cost of living adjustments.

This is the moment to acknowledge the concerns that Social Security will “run out of money” to pay the promised benefits. The latest Social Security Trustees report predicts that the “Trust Fund” will be unable to pay full benefits as soon 2032, which is right around the corner! At that point, unless Congress acts, the incoming receipts from today’s workers would only allow the payment of 77% of the guaranteed benefits.

Historically, Congress has acted to shore up Social Security before the trust funds were exhausted, as was done in 1983. And this time around, the huge baby boom generation is in the bull's-eye of those who would be impacted. Boomers vote. And woe to the party that reduces this promised payment after they’ve made FICA “contributions” for nearly 50 years!

As of 2024, the U.S. life expectancy at birth reached 79.0 years, with women living to an average of 81.4 years and men to 76.5 years. But Kotlikoff points out that life expectancy is a "moving target" that increases as you age. If you’ve reached age 70, you have a good chance to become a centenarian — or at least to live well into your 90s. The number of people who reach age 100 in the United States has doubled since 2010, to well over 100,000.

If you live into your 90s, your RMDs will have likely drained your retirement funds. If you take a fixed monthly check from an annuity at age 70, the buying power will be cut in half when you reach age 95 — even if inflation only averages 3%. Social Security is your only inflation-adjusted lifetime payments. Kotlikoff calls it a “catastrophic insurance benefit.”

If you’ve made it this far — to a few months before age 70 — Kotlikoff says you should ignore this tantalizing cash offer from Social Security and instead opt for the monthly check that is 4% higher.

You’ve made it this far, why bet against yourself now? And that’s The Savage Truth.

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(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2026 Terry Savage. Distributed by Tribune Content Agency, LLC.