Social Security claims at age 62 are a topic that's been gaining traction on social media, with some influencers claiming to have cracked the code on when to start receiving retirement benefits. However, experts are urging caution and cautioning that the calculation being used is missing crucial context. The idea is based on a 'break-even' age, the point at which delaying benefits yields more total income than claiming early. But, as Jason Fichtner, a former Social Security Administration executive, points out, this framing is flawed. No one knows when they will die, making break-even analysis imprecise. Social Security is meant to be longevity insurance, protecting you from outliving your savings. Fichtner argues that a break-even analysis is the wrong way to consider when to take Social Security retirement benefits. Instead, he suggests that beneficiaries should consider other factors, particularly how the timing will impact the size of their monthly checks. Claiming at age 62 provides the minimum monthly benefit, while waiting until full retirement age (typically 66-67) or even 70 yields higher benefits. In fact, waiting until 70 results in a 77% larger monthly check compared to claiming at 62. Fichtner emphasizes that claiming before 70 is a penalty, and the break-even framing can be misleading. It's important to consider life expectancy, as many individuals will live longer than average. Joe Elsasser, a certified financial planner, agrees, stating that prospective beneficiaries should ask themselves, 'How long could I live?' rather than 'How long will I live?' This perspective takes into account the impact of income on taxes and how benefit income affects the rest of the portfolio. Elsasser also highlights the importance of planning for both individuals and their spouses, especially in married couples with one higher earner. The higher earner's decision to claim benefits can impact survivor benefits for their spouse. Ultimately, the decision to claim Social Security should be based on what will make the individual happiest. Waiting to claim can be challenging, but Elsasser notes that clients who waited until 70 are happier due to larger benefit payments and reduced stress on their portfolios. While social media influencers may provide valuable insights, it's crucial to approach their advice with a critical eye, considering the unique circumstances and goals of each individual.
