JPM CEO Jamie Dimon admits lower-income Americans were left behind, and for 46% of retirees with zero savings, Social Security is their only income.
Claiming at 62 instead of 70 locks in a permanent 30% benefit cut that compounds larger every year through annual COLA raises.
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Picture a 66-year-old retired bookkeeper in rural Mississippi. She worked 40 years, raised two kids, and finished her career earning about $49,500 a year, almost exactly the national median wage. Her 401(k) balance is zero because her employers, mostly small local businesses, never offered one. Her checking account holds a few thousand dollars. Her monthly Social Security deposit is her entire retirement plan.
Her situation is not unusual. Roughly 46% of Americans have no retirement savings at all, and for many in the bottom half of American households by wealth, Social Security provides most, and often nearly all, of retirement income. The same $2,000 monthly check that a wealthier retiree treats as a bonus on top of a brokerage account is, for millions of others, the rent, the groceries, the Medicare Part B premium, and the electric bill.
According to Federal Reserve Distributional Financial Accounts data, the top 0.1% of U.S. households hold many times the wealth of the entire bottom 50% combined. JPMorgan (NYSE:JPM) CEO Jamie Dimon, discussing rising anti-wealth sentiment this summer, said it succinctly: "We have, in fact, left the lower-income folks behind." One half has portfolios. The other half has a check from the Social Security Administration.
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When Social Security is a supplement, taking it at age 62 versus 70 is a lifestyle question. When it is the whole floor, it is the single most important financial decision a person will ever make. Claiming at 62 permanently lowers a recipient's benefit by about 30% compared with waiting until full retirement age (FRA) of 67. Waiting until 70 adds roughly 24% on top of the FRA. On a $2,000 full-retirement-age benefit, that is the difference between about $1,400 a month for life and about $2,480 a month for life.
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