Go to main Forum page »
American social security advice is admirably clear, I’ll give you that. Delay Social Security until seventy to maximize your monthly benefit and create the ultimate hedge against outliving your savings. The maths is clear and unarguable, an eight percent per year, guaranteed return for every year you wait past your Full Retirement Age. It’s presented with such confidence, if only one’s life was such a tidy actuarial table.
But for millions of Americans, watching this from my perch in the UK, the decision of when to claim benefits is decidedly not a math problem. It’s a human story, a deeply personal calculation of current utility, health, and peace of mind that often trumps the pursuit of the largest possible future check. There’s something almost cheeky about a spreadsheet trying to tell people how to live, regardless of which side of the Atlantic one resides on.
The most common reason for claiming early, between 62 and 67, is refreshingly simple: need. A job loss in one’s early sixties, an unexpected medical crisis, or the crushing weight of high-interest debt can quickly turn a retirement plan into a rather urgent struggle for solvency. In these scenarios, the immediate infusion of cash from a Social Security check, even a reduced one, becomes a lifeline, not some theoretical optimization problem.
It provides financial stability today, right now, ensuring bills are paid and high-interest debt is eliminated before it transforms into something truly ghastly. For many Americans, the peace of mind derived from having a consistent income floor now, when they need it most, is far more valuable than the promise of a bigger check a decade down the road. The models seem to forget people are actually living these years, not just calculating through them.
The mathematical model rests rather optimistically on the assumption that you’ll live long enough to reach the break-even age, typically around eighty, and collect enough of the higher payment to justify the delay. Lovely theory.
But what if health conditions or family history suggest a shorter lifespan? What if you’ve watched your father, two uncles, and your older brother all depart this mortal coil before seventy-five? For those facing such cheerful realities, delaying benefits becomes a gamble they cannot afford to win, or rather, cannot afford to lose. The goal shifts from maximizing the dollar amount to maximizing the enjoyment of the money they contributed over decades of work. Taking the benefit early ensures they receive their due while they’re alive and well enough to actually use it for travel, hobbies, or simply reducing the financial stress that can accompany poor health. The spreadsheet people rarely account for the utility of joy.
For married couples, the claiming decision often revolves around longevity insurance for the lower-earning spouse. The highest earner delaying until seventy creates the largest possible survivor benefit, a decision that protects their partner from potential poverty later in life. Very sensible, really, assuming everyone cooperates by living to the appropriate age.
The opposite can also be a utility play, and a rather sensible one at that. If the higher earner is in poor health, claiming early, even a reduced benefit, ensures the household has access to that cash flow when they need it most, rather than leaving the couple cash-strapped in their early retirement years while waiting for an uncertain future benefit. It’s all well and good to maximize survivor benefits if you’re around to see your spouse actually receive them, but living on rice and regret for eight years hardly seems like optimal retirement planning.
Social Security is a foundational retirement pillar that must be built on one’s real-life circumstances, not just a spreadsheet that’s never had to choose between medication and heating. The greatest utility may not be the largest final number, but the benefit that provides the most security, comfort, and opportunity during the time you need it. 62 is definitely not ideal, 67 is much better and 70 is perfect…it’s just a shame life is messy and human need has to come before logic for many ordinary people. Sometimes you have to come out of the high castle and meet the common folk.
Mark, I humbly thank you for this, it was excellent and spot on. There are many of us “regular people” on this site. We worked hard too. We don’t need judgment for our choices, we did the absolute best we could as we learned more about finances. Thank you for “getting it”. Chris
I agree with your argument that personal need trumps mathematical models that maximize the dollar amount. However, your critique of optimizing the financial return from SS is strongly slanted towards claiming early. I decided long ago without the help of any spreadsheet or break-even analysis that my strongest personl need from SS is to help ensure that I don’t run out of money regardless of how long I live. I’m sure I was influenced by my mother whose biggest fear in old age was that she would need to rely on her children for financial support. Even though she lived to 99 she was able to remain financially independent due to a combination of SS income and living in a Type A CCRC.
Yes, I admit it—it was deliberate! I found that most standard articles on Social Security simply give lip service to the idea of taking benefits early before dedicating most of their space to reasons for delaying. Since I don’t have “skin in the game,” I thought it would be a valuable and interesting exercise to try flipping the script. The goal was to offer a quick acknowledgment of the delaying strategy and then focus on a deeper, better-developed exploration of the arguments for the reverse.
You did a good job of stating the case for claiming early. However, I can’t help but think of a relative who claimed at 62 because she “needed” the money because she had been living on maxed out credit cards for years. It would have been great if she had used her SS income to help her get out of debt but instead she used it to add to her collection of Coach purses and for other discretionary spending while continuing to make minimum payments on her credit cards.
My father-in-law still worked part-time until a few months before he died at age 85. My mother-in-law, who never worked in the US, currently gets $3516.80 per months in SS, after Medicare fees are taken out. That’s a pretty good survivor benefit. She’s 96 and in good shape.
For us, it’s not just about the survivor benefit, although that is a consideration. We also have to do the math on Roth conversions, taxes, IRMAA surcharges, and the opportunity cost of drawing down our portfolio for eight years before taking SS at 70.
David, you are in a position of having agency over your choices; absolutely the ideal position to be in. My article was more structured around the majority who unfortunately, due to a myriad of life and health reasons, haven’t achieved the position of agency over their retirement choices.
I never even remotely considered stopping work before 70. My decision to continue working was hardly a “position of privilege”. Everything I now have I worked very long and hard for. I’ve avoided the physical and mental declines caused by smoking, alcohol, drugs, improper nutrition, and lack of exercise; and have so far had the good luck to not be affected by non-lifestyle attributed diseases or accidents.
I turned on Social Security at 70 to assure maximum current benefit, maximum survivors benefit, maximum dollar value COLA increases. And, those post-FRA years were also some of highest earned income years, again adding to the final benefit amount.
And I, as with most now approaching retirement, never had any possibility of a defined pension. Retirement savings and Social Security is all there will be. Waiting to 70 maximizes both.
I understand, in your personal case, it wasn’t from a position of privilege, but it was certainly from a position of “ability” and “choice”. You had the ability to work until seventy and, because the math was compelling, chose to do so. Unfortunately, your combination of ability and choice are not a given for most people.
Dear Mark,
William apologies for not referencing your article’s internal rate of return figure. My bad!
What is wrong with a view from outside? Americans have a tendency to think they have the best system for a lot of things because they don’t know enough about life elsewhere.
Updated: I see that William has edited his post to remove the point to which I responded.
You are absolutely right. I learned that from traveling and visiting people in their homes and asking questions.
I have observed that folks from places like Canada and the UK know much more about the US, then I know about their country.
All these scenarios illustrate the way that everyone’s stars align differently. My waiting until 70 required the right job, right health, and right amount of luck. Other people’s results will surely vary.
Waiting until 70 to claim SS is undoubtedly a position of privilege. You have to have the income and/or savings to bridge that gap, and if you do, it’s kind of a no-brainer, with the caveat that if you have a health condition that means you won’t make it until 70, you might as well get something while you still can. But the people who wait until 70 are the ones who ultimately need it the least.
I suspect you are right, but if that is true and retirees don’t need to delay to 70, why do it? It is not only the risk of getting to 70, but getting past 70 long enough to make it worthwhile.
I feel that if you’re in the very fortunate position of not needing to claim, it then becomes a personal choice. And as we all know and understand, personal choice is just that: personal, and not for others to judge.
Our Humble Opinion: Social Security is such a wonderful source of retirement income that most folks should delay benefits, so they get a larger monthly check. Retirement’s big financial risk isn’t dying young, with scant money collected from Social Security. Rather, the big risk is living so long that you deplete your savings—at which point a fat Social Security check could be your financial salvation.
Jonathan Clements
https://humbledollar.com/money-guide/introduction-to-social-security/
I waited until 70 and I definitely need it. I didn’t need it between 67 and 70, but now, with a pension with no COLA, living in a CCRC which will cost more each year, I not only need the SS, I am starting to draw on my portfolio.
FINALLY ‼️ Someone really gets it. And it took an Irishman to sort it out. Well done.
Smart, those Irish!