62, 67, or 70? Here’s When I’m Claiming My Retirement Benefits From Uncle Sam

A bird in the hand? Two in the bush? Or a pig in a poke? 

Seems like the appropriate collection of possibilities when folks get to chatting about Social Security. Either take it as soon as you’re eligible…or wait a few years for a bigger payout…or just forget the whole shebang because the system is a Ponzi scheme a day or two from implosion. 

This conversation popped up twice in four days during my time in Malta. A retired exec from New York turns 62 this week and “you can bet I am immediately applying for it!” 

She doesn’t need the dollars—“it’ll just be travel money, really,” she told me over a plate of rabbit ravioli (ridiculously good) at an al fresco eatery on an alley-like street once known for its brothels. “But I’m not convinced it will continue to exist. So, get what you can while you can get it.” 

A few nights later, in a more-local, working-class neighborhood, I was sharing a blue-cheese chicken pizza made by a Macedonian (also most excellent) with an American couple who moved to Malta three years ago from Sweet Home Alabama. 

They’re both eligible for Social Security now, but they don’t need the money, either. So, they determined years ago to delay claiming their rightful payout until they’re both 70. 

“Eight percent is 8%,” the wife told me, referring to the annual increase in payments for each year you wait to collect your Social Security check. “Easy, no-risk return. You want another beer?” 

I highlight these two dinners because my companions have made diametrically opposed decisions, even though they’re in very similar situations. Speaks directly to that choice I mentioned at the outset: now, later, or never? 

I’m going to go ahead and take “never” off the table. Social Security’s funding comes by way of worker paychecks.  

So, unless the entire population of workers goes AWOL, the system will always have a bunch of money flowing through it. (Whether benefits for future retirees are trimmed is a different story.) 

Therefore, the real question is: Now or later? 

Obviously, everyone’s situation is different. Some folks really have no choice but to dig into Uncle Sam’s pocketbook as soon as they possibly can. I get that. No shame in it. 

But if your fiscal situation is such that D.C.’s dollars aren’t going to alter your lifestyle or what you can afford, then it makes a great deal of sense to wait. 

I’ll use myself as an example… 

If I claim Social Security early, at 62, my benefits are $2,022 per month, according to ssa.gov, the Social Security website. At full retirement age, 67 in my case, my income jumps to $2,872. And if I slow my roll and claim at 70, the government will send $3,561 to my bank account every month (that’s according to today’s dollars; that will increase as the years roll by.) 

Now, if you think about retirement, it’s basically shaped like a dumbbell. We’ve got big expenses early on as we chase the freedom of living the retirement we want. Then we naturally slowdown as we age, and expenses shrink…and suddenly they’re up again as healthcare issues arise. 

Makes a lot of sense to me to rely on your nest egg early on and allow your Social Security check to fatten up. That’s because Social Security is effectively a lifetime annuity, a stream of income you can never outlive, and which will (to some degree) keep pace with inflation.  

You might very well outlive your nest egg, even if you’re prudent, simply because you keep drawing air. 

But Social Security will keep on keeping on, so long as you do, too. 

As such, at 95, I’d much rather be pulling in the inflation-adjusted version of $3,561 every month than the inflation-adjusted version of $2,022. The financial quality of life my wife and I live will be better. It’s just math. 

So, a bird in the hand or two in bush? 

I’m betting on the bush.