Overview of DIY Money’s “When to Take Social Security”
In this episode, the hosts answer a listener question about whether it can make sense to start Social Security early at age 62, invest the benefits, and let that money grow instead of waiting until age 70 for a larger monthly payment. Their core conclusion: yes, this can be a smart strategy in many cases—but only if you actually invest the early benefits and account for taxes and earnings limits.
Main Question Discussed
A listener asked why advisors often recommend delaying Social Security to age 70 if:
- You could claim at 62,
- Invest the monthly checks,
- Keep that money growing until age 70,
- And then still receive Social Security later.
The hosts explain that this is a valid apples-to-apples comparison and that, when modeled properly, investing early benefits can often produce a better long-term result than simply waiting.
Key Takeaways
Early claiming plus investing can outperform delaying
- The typical “wait until 70” advice often ignores what happens if early benefits are invested.
- If the early Social Security payments are put into a reasonable investment portfolio, the compounded growth can push the crossover age much later, often into the 90s.
- In many scenarios, the early-claim-and-invest approach can create more total wealth over a lifetime.
The real comparison is lifetime value, not monthly benefit size
- Delaying Social Security increases your monthly check.
- But the hosts stress that the real question is:
- At what age does waiting actually become better in total dollars received?
- That break-even age is what should drive the decision, not the headline monthly payment alone.
Important Caveats
1. You must actually invest the money
- This strategy only works if the early Social Security checks are truly invested.
- If someone claims early but spends the money, the math no longer works.
- The hosts note that many people fail to make this comparison correctly because they do not model the invested early benefits.
2. Taxes can change the answer
- Social Security benefits can be taxed depending on your income.
- In some cases, starting benefits earlier or later can affect:
- How much of your Social Security is taxable,
- Whether you move into a higher Medicare premium bracket.
- For higher earners, these tax effects can make waiting a little longer more attractive.
3. Working before full retirement age can reduce benefits
- If you start Social Security at 62 but are still working, the earnings test can reduce benefits.
- The hosts mention the rough rule:
- For every $2 earned over the limit, $1 of Social Security is withheld.
- That can wipe out much of the advantage of claiming early if you still have meaningful earned income.
- Those withheld amounts are later recalculated at full retirement age, but it still complicates the strategy.
Practical Advice
The hosts’ overall guidance is:
- Run the numbers for your own situation
- Compare:
- Claiming at 62,
- Claiming at full retirement age,
- Claiming at 70
- Include:
- Investment growth assumptions,
- Tax impact,
- Earnings limits,
- Expected longevity
Their bottom line is that claiming early and investing can be a strong strategy for disciplined investors, especially if you do not need the income right away.
Final Thought
The episode reinforces the show’s broader philosophy: make decisions based on full financial math, not just common wisdom. In this case, the “wait until 70” rule is not always best once you factor in investing and tax realities.