Dear Liz: If I wait until I am 70 to claim Social Security, my benefit will increase 8% a year. With inflation above 8%, should I take Social Security early? I am almost 68.
Answer: This question was answered in a previous column but needs to be addressed again because so many people misunderstand how Social Security cost-of-living increases work.
Social Security applies cost-of-living adjustments to your benefits whether you’re currently receiving them or not. In other words, your benefit has been receiving inflation adjustments since you turned 62, when you were first eligible.
Applying now doesn’t get you anything extra and, in fact, costs you because you’re giving up the 8% annual delayed retirement benefits you would otherwise receive.