Should You Take Social Security Early?
One of the biggest retirement questions Americans face today is this: Should I take Social Security early or wait?
For years, conventional financial wisdom has suggested delaying Social Security benefits as long as possible—often until age 70—to maximize monthly income. But with growing concerns about Social Security solvency and headlines warning about potential future benefit cuts, many retirees are beginning to reconsider that strategy.
The conversation has become even more urgent as projections continue to suggest that Social Security trust funds could face shortfalls in the coming decade if Congress does not act.
So what happens if benefits are reduced in the future? Would it actually make sense to claim Social Security early instead of waiting?
The answer may surprise you.
Understanding the Concern About Social Security Cuts
Much of the concern surrounding Social Security revolves around projections that the system may only be able to pay approximately 80% of scheduled benefits beginning around 2033 if changes are not made.
That doesn’t mean Social Security disappears. It simply means incoming payroll taxes may only cover about 80% of promised benefits unless lawmakers step in with reforms.
Several potential fixes have been discussed over the years, including:
- Raising the full retirement age
- Increasing payroll tax rates
- Raising or removing the Social Security wage cap
- Means-testing benefits for higher-income retirees
- Reducing future benefit growth
Most financial professionals believe Congress will eventually make changes rather than allow an automatic across-the-board cut. Still, uncertainty causes many retirees to ask an important question:
Should I take Social Security at 62 before possible changes happen?
The Traditional Advice: Delay Social Security
Historically, many retirement planners have encouraged retirees to delay claiming Social Security benefits because of delayed retirement credits.
Here’s why:
- Claiming at age 62 permanently reduces your monthly benefit
- Waiting until full retirement age gives you 100% of your benefit
- Delaying beyond full retirement age can increase benefits roughly 8% annually until age 70
On paper, waiting appears attractive because it provides a larger guaranteed monthly income for life.
However, there’s another side to the equation that often gets overlooked:
What if you claim early and invest the payments?
The Surprising Math Behind Claiming Early
Let’s look at a simplified example.
Assume someone:
- Turns 62 in 2026
- Has a full retirement age benefit of $2,000 per month
- Would receive approximately $1,400 monthly at age 62
- Invests the Social Security checks instead of spending them
- Earns a hypothetical 5% annual return
- Receives annual cost-of-living adjustments
When running the numbers, something surprising happens.
Even under a scenario where Social Security benefits are reduced by 20% in the future, claiming early and reinvesting the money can potentially produce greater long-term value than waiting.
Why?
Because compounding matters.
The earlier those dollars begin working, the more time they have to grow.
Why Compound Growth Changes Everything
One of the most powerful forces in investing is compound growth.
If someone begins collecting Social Security at age 62 and reinvests those payments, they gain several extra years of contributions and growth.
Those early years of compounding can outweigh the larger monthly checks received later by waiting.
This is especially true when:
- The retiree does not need Social Security income immediately
- The funds can remain invested long term
- The portfolio earns steady returns over time
In many cases, the break-even age where waiting finally wins may not occur until well into someone’s 90s.
That’s dramatically different from what many retirees expect.
What If Social Security Is Fixed?
Interestingly, the math can still favor claiming early even if Congress fixes Social Security and prevents benefit cuts entirely.
That’s because the key driver is not necessarily the potential reduction itself.
The key driver is the power of reinvesting the payments early.
When retirees wait until 67 or 70, they receive larger monthly checks later. But they also give up years of earlier payments that could have been invested and compounded.
In many scenarios, those early invested dollars create substantial long-term value.
But There’s a Huge Catch
Before anyone rushes out to claim Social Security at 62, it’s important to understand the biggest caveat:
This strategy only works well if the money is reinvested.
If someone claims early and simply spends the money, the equation changes significantly.
That’s why this strategy may make more sense for retirees who:
- Already have sufficient retirement income
- Have pensions, IRAs, or investment assets
- Do not rely on Social Security to cover essential expenses
- Can afford to let the payments grow
For retirees who need Social Security immediately to pay monthly bills, maximizing guaranteed income may still be the more appropriate strategy.
Married Couples Need to Be Extra Careful
Social Security claiming strategies become much more complex for married couples.
Spousal benefits, survivor benefits, and widow benefits can dramatically impact the optimal claiming decision.
For example:
- Claiming early permanently reduces survivor benefits
- A lower earner may qualify for spousal benefits
- The higher earner’s decision often affects the surviving spouse later
This is one reason why generalized Social Security advice can sometimes be dangerous.
A strategy that works beautifully for a single retiree may create unintended consequences for a married couple.
Personalization matters.
The Risk Nobody Talks About
There’s also another major risk involved:
Investment returns are not guaranteed.
The strategy of claiming early and investing the money depends heavily on achieving reasonable long-term returns.
If investments underperform—or if the market experiences prolonged declines—the strategy could backfire.
In that case, the retiree may:
- Lock in permanently lower Social Security benefits
- Experience disappointing investment performance
- Reduce lifetime guaranteed income
That’s why risk tolerance, investment strategy, and retirement income planning all play critical roles.
Longevity Changes the Equation
Life expectancy is another critical factor.
Generally speaking:
- People with shorter life expectancies may benefit from claiming earlier
- Those expecting very long retirements may benefit more from delaying
If someone lives into their mid-90s or beyond, the larger guaranteed checks from delaying Social Security can eventually overtake the benefits of claiming early.
Health, family history, and lifestyle all matter when making this decision.
Don’t “Panic Claim” Social Security
One of the biggest mistakes retirees can make is making emotional decisions based on alarming headlines.
Fear-driven claiming decisions can create unintended long-term consequences.
Just because projections suggest possible future changes doesn’t automatically mean everyone should claim Social Security immediately.
Instead, retirees should evaluate:
- Their income needs
- Tax situation
- Investment strategy
- Health and longevity expectations
- Marital status
- Retirement goals
Social Security decisions are highly personal.
There is no universal answer.
Why Personalized Planning Matters
Every retirement plan should be built around an individual household’s specific goals and circumstances.
A personalized Social Security analysis can help retirees evaluate:
- Optimal claiming ages
- Lifetime income projections
- Tax efficiency strategies
- Spousal coordination opportunities
- Investment assumptions
- Longevity scenarios
What works for one retiree may not work for another.
That’s why comprehensive retirement planning remains so important—especially during periods of uncertainty.
The Bottom Line
The traditional advice to delay Social Security is not always the clear winner many people assume.
In some situations—particularly for single retirees who can reinvest their benefits—claiming Social Security early may actually create greater long-term value.
But there are important risks and tradeoffs involved.
That’s why retirees should avoid making emotional or headline-driven decisions and instead focus on building a personalized strategy based on their own financial picture.
Social Security is only one piece of the retirement puzzle. The best strategy is the one that aligns with your full retirement income plan.
Frequently Asked Questions About Claiming Social Security
Should I take Social Security at 62?
It depends on your financial situation, health, marital status, and whether you plan to reinvest the money. Some retirees benefit from claiming early, while others may benefit from waiting.
Will Social Security be cut in the future?
Current projections suggest Social Security trust funds may face shortfalls around 2033 if Congress does not act. However, many experts believe lawmakers will eventually make changes to preserve the system.
Is waiting until 70 always the best strategy?
No. While delaying increases monthly benefits, claiming earlier and investing the payments may create more long-term value in certain situations.
What happens if I claim Social Security early?
Your monthly benefit is permanently reduced compared to waiting until full retirement age or age 70.
Can investing early Social Security payments outperform waiting?
Potentially, yes. If the money is reinvested and earns solid long-term returns, compound growth may outweigh the benefits of delaying.
Does being married affect Social Security claiming strategies?
Absolutely. Spousal and survivor benefits can significantly impact the optimal strategy for married couples.
What is the biggest risk of taking Social Security early?
The biggest risk is locking in permanently lower benefits while failing to achieve sufficient investment returns on the reinvested funds.
Should I make my Social Security decision based on headlines?
No. Social Security decisions should be based on personalized financial planning rather than fear or media headlines.
Daniel Wendol
Item #1
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We are staring down the possibility of a 20% cut across the board for social security payments. You’ve heard it. You’ve seen it. 2033, Social Security becomes insolvent. People begin to start thinking about, well, when should I take it? And does this potential cut change the math? Change the values that I’m going to be getting so that I should probably take it early or maybe I should delay. And I’ve done the math and I did it in a scenario where there’s a 20% cut in social security and I’ve done it
00:00:33
where social security is fixed. And I’m going to show you the results and I think it’s going to surprise you because it certainly surprised me. Let me bring in my co-host, not a surprise, Tony. Welcome to the show. You know what’s surprising, Tony? When we started working together, >> you were in your 40s. I was in my 30s. And now you’re in your 60s. And when we started talking about social security, we were looking at a insolveny year 2036, 2037 when we started working together. And now the latest is 2033.
00:01:13
And now you’re really close to making that decision of taking social security or not. >> Now wait a minute. Wait a minute. You’re saying the outlook was a lot better when we started. It’s worse now. Are you saying we’re to blame? Something you’ve said on the show, Dan, has caused Social Security to deplete quicker. The advice you’ve been giving. Is that the issue? >> Well, I think this looming cut might change the behaviors of people and rightly so. >> Yeah. The looming cut.
00:01:48
>> Yeah. Um, and what I mean by that is less money is going into social security through payroll taxes than is coming out. Normally what’s been happening in the past is people pay payroll tax and that money then goes into the government and right back out to the people claiming, but less people are working, more people are taking social security. So now we’re at a point where it’s going to be close to only 80% of the money coming in is uh is going to be there to go out. So where’s the other 20% going
00:02:18
to come from? And the question becomes, will the government just cut it across the board, which is one potential outcome? So I wanted to do a scenario that says, should I claim it at 62 or as early as possible if they make this 20% cut across the board happen? And I also ran the same numbers and said, what if they fix it? Because I know you’re a big proponent of fixing things. You believe they’re going to fix it, don’t you? I do believe they’re going to fix it. I I think they have three major ways to fix
00:02:49
it. They’ll raise the full retirement age uh your FRA from 67 to maybe even 70 uh but at least 68 69 maybe 70. And so raising the full retirement age would bring in more money. Um also raising social security tax that we pay out of that workers pay in. Now it’s like what is it 6.2 for the employee and 6.2 two for the employer. So, it’s about 12.4% is getting paid in. They’ll raise that number to 13 or 14. And then they’ll take the cap off or raise the cap on how much income uh they withdraw Social
00:03:28
Security tax from when people are in their working years. Right now, it’s what is it 189,000 or >> somewhere in there? Somewhere in there. >> Tied to inflation. >> Yeah. So, it’s tied to inflation. But but anybody making 200,000 or more they’re not paying like let’s say I make 500,000 a year uh let’s say I’m a you know I’m a seuite person an owner or a founder uh and I’m making some sweet money and I’m I’m pulling in uh you know a million two a year and my bonus is 500
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grand that million2 a year I’m only paying into social security on 180,000 of it or right around there putting in by March. >> Yeah, exactly. So, if they take away that limit and yet don’t raise how much is paid out to those people. So, that would have to pass. Yep. Yep. And that’s a sticky air. That one’s a sticky wicket. But if I was them, I would do all three and social security be good for another 200 years. >> Well, Tony, what if I told you that it doesn’t matter if they fix it or not?
00:04:33
The math is suggesting the same thing. >> Okay. >> Yeah. Yeah. And this is relevant to you and to the listener obviously because you’re still wondering. Hey Dan, what is what should I do? 62. I don’t know if they’re going to fix it. I I kind of agree with you Tony. I think they’ll do a combo. But let’s say they don’t >> and let’s say they cut 20% across the board. >> Yeah. >> Which again, I don’t know if that’s what will happen either. They’ll probably do
00:04:58
some means testing cut or people making above a certain amount, they get cut more so on. But let’s just assume it’s a 20% across the board. What do you think you should do if that was the case? Claim it early or not? >> That’s what I want to share. I’m going to tell you. I’m going to answer it. >> I don’t know. I I think it’s a it might be a wash, but uh let’s hear what you have to say. >> So, let’s assume you’re turning 62 in 2026. >> Okay.
00:05:29
>> And your full retirement age benefit at >> a couple years yet, people. I’ve got a couple years yet. Just >> But the listener might not. They might be 63 saying, “Should I turn it on today?” >> Right? >> And let’s say uh for the math purposes that I’m going to show you the math that $2,000 is your full retirement age benefit at 607, which means that if you take it at 62, you’re going to get 1,400 because you’re claiming early, >> right? I’m also going to throw in
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what you’re going to do with the money and I’m going to throw in a cost of living. I’m going to put use 2.5%. I know it’s been higher lately, but let’s just use 2.5% for cost of living. I’m going to put that you’re going to reinvest the funds at 5% return compounding. So, you’re taking the money early and reinvesting. I’m also going to assume that 85% and no more of your social security benefit is taxable because we know right now 15%’s tax-free. We’ve done shows on all of
00:06:32
this, but I’m just saying what the assumptions are for this scenario. And I’m also going to show a 22% tax bracket. So, when you do claim the benefit and you start paying taxes on it, you’re paying 22%. And I’m also going to show a 15% long-term capital gains on the growth. All right. So, Tony, let me share this chart. Now, for the listeners on Spotify or whatever, you can’t see, but what this shot shows is who’s the winner, claiming it at 62, 67, or 70 if there’s a 20% cut across the board for
00:07:09
Social Security? And Tony, in that right column there, who’s the winner? Wow. At age 75, age 80, 85, age 90. At 95, meaning if you live to 95, it makes sense for you to claim it at 62. >> That’s crazy. How could that possibly be? That’s wild. >> Well, I’ve talked about the in the past about delaying social security, but in this scenario with a 20% cut across the board, it makes sense to take it early. And there’s a main reason for that, Tony. >> Yeah, >> there’s a main reason, and that is
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you’re going to reinvest it at a 5% return. >> You don’t need the money. You don’t need the money. So, so the so how you get there is you’re getting more checks. They are at a lower uh amount. You’re locking in a lower rate at 62, which we’ve talked about can be problematic. But, uh, if they’re going to, this is if if they cut social security by 20%. And you take your social security at 62 and reinvest it. >> Yes. This is what then it’s wise to take it at 62 because this these numbers are
00:08:21
what happens. But this is assuming what uh 7% growth average >> uh five 5% growth. It is >> only five. Okay. So that’s good. That’s being that’s being realistic. Um because you know the the market has averaged way more than that uh over the last >> so many years. So so that’s that’s a realistic number. But I want to point out, Dan, to our listeners and viewers, this is only if if somebody files for uh social security. The only problem with this theory is if somebody files for
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social security, it’s typically because they need it to live on or they’re going to put spend it to spend it. Now, if they re if you file and reinvest, if you’re in a position to do that, I guess you’re talking to those who have other funds, they have a pension, they have IRA, so they don’t absolutely have to have this to live on month-to-month, reinvest it, then it makes financial sense. And the numbers are great. In fact, if you file at 62 and reinvest it is what you’re saying.
00:09:22
>> That’s what I’m saying for sure. Especially, and this is for a single person claiming at 62. Absolutely take it early if you can reinvest it and get 5%. You might even get more. You could get less and it still makes sense, right? And the reason is because that early those early checks, you know, whether it’s six, eight years extra of checks, that compounding growth early is difficult to overcome. Let’s look at it. If there are no cuts, Tony, do you think the math changes?
00:09:55
If they say, “Let’s fix it. We’re going to fix it somehow in one of the many ways, you know, because you’re going to be on the the Social Security trustee board next year, right? I put your name in. >> I once they once they see this show, I I’m assuming they’re going to give me a call. Yeah. >> So, let’s look at it. If there’s a no 20% cut, what happens then? Here’s the new chart, Tony. If you live to 75, better take it at 62. If you live to 85, better to take it at 62. It’s only until
00:10:30
you reach age 90 that it starts to break even that there’s a tie between taking at 62 and 67. And if you live past 95, then it makes sense to take it at 70 barely. >> Wow. >> So, no cuts. Claiming at 62 still wins until the early 90s. And again, this is really because those early checks help. But if there’s a 20% cut, then the early checks help early claiming. If there is no cut, the it’s not as dramatic to take it late uh early, but it still makes sense to take it early
00:11:11
regardless of how long you live or if they cut it or not because again you’re reinvesting the money. You have to reinvest that money. Was this surprising to you? >> I it is surprising to me, I guess. But the thing is, Dan, um the kicker here is even if even if they fix social security, it doesn’t drop by 20%. It looks like it still makes sense to take it at 62 if you can reinvest that money. So, and we’ve never come at it from this angle. I think in all the years we’ve been doing this, and we’ve talked about
00:11:49
social security so much, uh we’ve talked about does it make sense to file at 62? Should you wait till full retirement age in what instance? And it’s different for everybody. Everybody’s situation is different. But we’ve never put out the numbers that say if you reinvest and make at least 5% on the money, it makes sense to file early at 62. That’s what you’re telling us today. I’ve never heard anyone else say this. Um this in my 13 years of working in the financial world.
00:12:19
>> And the reason why, Tony, is because there’s some caveats which I want to go through. >> Okay. Yeah. Well, the the reinvesting it part is the is the biggy >> is the new is the new twist here, a new angle. But I think there are people listening. We know there are people listening who have enough to do this. Um but the social security so for them it’s like well it doesn’t really matter. I’ll just wait till 70 but because I have other money right to use and that’s what
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most financial advisors will tell you. If you have other money to pull from, let your social security go up to 70. That is the most common advice given that you’ll hear out there from almost all, not all, but almost all financial advisors. But they’re not considering if you already have enough in your other means to live on, why not take social security early, reinvest it, and make more money on it long term, >> especially especially if you’re single. And that’s what the caveat comes to,
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Tony. And you know, you’re going to be close to claiming in a couple years. You could what I just told you is you should take it early regardless if they cut it or not, right? I can get you a 5% return. Can I can I? But >> nothing’s guaranteed. But yes, >> um you’re married though >> and so that’s a huge caveat. Ah >> um >> you know so spousal benefits change everything if you’re married or divorced you’re widowed you know you have a widow you’re
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a widowerower that changes what you should do and claiming early may not make the sense because you have a spouse that’s relying on yours and if you’re cutting yours down you’re hurting your spouse. That’s the widow’s trap or we did shows on it, the ribbim. So, we know that being married in the United States impacts social security in a big way. So, that’s a huge caveat. You can’t just jump feet first into taking at 62 because the math says I can reinvest it and oh, I can do better than 5%. I can
00:14:29
get 10%, I can get 8%, whatever. >> Sure. >> Then, yeah, take it early. if you’re going to reinvest it and if you’re not remar if you’re not married >> ah >> because that changes it because the the marriage part changes it dramatically. >> Yeah. >> Some some other things life expectancy matters your health. >> Um so it really comes down to the personalization of it all. Don’t panic claim. I’m calling it panic claim. New word. Don’t panic claim
00:15:00
because you think it’s going to cut get cut 20%. Although I just told you you should, right? I just told everyone it makes sense to do it. But don’t don’t panic. Get the personalized review and figure out does it make sense for me. >> Yeah, because everybody’s numbers are different. You’ve got to do the math. Like you always say, Dan, you’ve got to do the math. And and before we go, I saw you put the QR code. people can just click that and go right to the page. Uh if they take a shot of that QR code,
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it’ll take them there. Uh I think that’s awesome, by the way, and it’s a great resource. You should do that. Get your personalized review. However, Dan, uh, I always hear I’m going to challenge this a little bit because most financial advisors tell me, they say, “Tony, the reason you wait, if you have other means of living, let your social security write up to 70 because it goes up the rate Social Security increases because they add on the amount uh, increases per year you wait, right?
00:16:04
But even if so, so it goes up 8% a year. They’re thinking, well, you can’t necessarily you can’t count on making 8% a year if you take it out and invest it. So, it’s better to let it roll up. But what they’re not counting is you’re locking in a much lower amount and you’re not making you’re making 8% on a lower amount. Um, I don’t I I I don’t know, but you don’t make 8% until between 67 and 70. So that’s only what three years. >> Well, you do you you make over 6% uh by
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letting it roll up before then. >> Sure. >> But again, the the math suggests, Tony, especially if there’s a cut, >> right, >> that you better have the money early if you reinvest it because that compounding growth is difficult for even the the the generous social security cost of living and and uh additional delayed retirement credits. They you can’t overcome early compounding. >> That’s true. >> You can’t you have to reinvest. That’s the other thing you and you said it
00:17:02
right away. What if you don’t get what like 5%? What? Yeah, I can get eight, but what if I don’t? What if I lose eight? >> Yeah. Yeah. >> Right. And that’s the risk is Yes, there’s a reinvestment risk. What if you can’t reinvest it and get 5% guaranteed? I mean, you could get that now. Maybe you can lock that in for 10 years with a multi-year fixed annuity or something like that, but there’s a risk involved in reinvesting. What if you don’t get those returns? Then now you’ve locked in
00:17:36
a lower income for the rest of your life. You’ve lost money through investment and you’re guaranteed to get a lesser amount for the rest of your life. So, it can work against you if you don’t get the returns. And that’s really the risk. So that’s why you shouldn’t necessarily just go off of this saying, “Oh yeah, I can get 5%.” It makes sense. You know, it it does make sense if you do the math. That’s what I was trying to show. But what if one of those things
00:18:01
changes? What if the returns different? What if you’re married? What if you live really long? All of that impacts it. So again, it’s not there’s not >> a correct answer, >> but if we’re just going to look at it in a vacuum and say, I can reinvest it. Should I take it early? The answer is yes, which is very different than what I’ve said in the past in terms of just generally speaking. So don’t panic because of the headlines, though. That much I I think we can both agree.
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>> Um, and if you can reinvest it, yeah, of course, compound interest makes sense. It’s like why I tell my kids, “Hey, you had your first job um washing dishes.” One of them is one of them is baking cookies now. His first job. Um >> Wow. >> Take that money and put it in a Roth. >> Dad, I’m 16. Yeah, you you you’ll thank me in 50 years. >> Sure. >> You know, delayed gratification. >> What I tell my kids, >> Allison opened her Wroth at 21 and puts
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$200 in a month. She’ll be a multi-millionaire by the time she’s 65. assuming compounding growth, which >> assuming compounding growth. Yes. Yes. Of course, there’s always a risk with everything, but you know, if the market does what it’s done over the last 100 years, she’ll be set. >> Um, right. >> There’s no guarantee of the market doing for the next hundred years aren’t guaranteed to be the same as the previous, but if even if they’re close, uh, we’re in good shape,
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>> right? And I feel more confident for your daughter growthoriented than you who’s got, you know, you’re 40 years older than her. So it’s like, hey, I don’t have the time to ride the wave. Maybe I have to go and then reinvest my social security check at a lower growth rate because it’s not risky. And then it’s like, well, if you’re just gonna try and eliminate risk, just delay social security because there that’s the whole point of it is to delay the longevity risk. So again, and if you’re
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married, everything changes. So, I hope this was useful, Tony. I’m hoping and I’m I’m challenging people watch the show on contacting your local representative to fix social security. We did a whole show on that, how easy it is. But yeah, man, the math, Tony, take it early. Wow. Did you think I would be telling you that? Uh, no. I I did not. And this is a hot take. I love this. And hopefully people will see this. Uh, look forward to comments and click on that QR code. But again, you need a personalized
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maximization report run. I know you do that for folks, Dan. So that’s great. >> I will just let me know you want a social security maximization report. I will do it for you, send it to you via PDF, and then you can use that to make your decisions or at least begin the conversation. >> Excellent. >> All right, Tony. Thanks for good show. We’ll catch up with you in two years to see whether or not you’re ready to turn it on early. We’ll see.