I’ve Changed My Mind About Social Security

The facts have changed.

My mind is on the verge of changing too.

Figured you should know about it. Might help you in thinking about this topic in your own life.

The topic: Social Security and when to lay claim to what’s yours.

To be clear, I’m not aiming to undermine Steve Garfink, International Living’s Social Security guru. He and I have largely been on the same page when it comes to holding off on claiming Social Security (i.e you’ll get more money if you wait a few years to claim).

However…

Next January, I will hit 60. (I can already sense that you and my managing editor, Ben, are planning something grand. Black, by the way, is my favorite color of Aston Martin. And two is my favorite number of bedrooms in a quaint Irish cottage down by the Gap of Dunloe in Ireland’s County Kerry.)

The milestone means that I’ll be just two years shy of my ability to claim Social Security early, at 62.

For most of my adult life, I’ve told myself that I’ll wait to claim until I’m at least 67, full retirement age for my cohort of Gen Xers. I’d likely even try to push to 70. Every year between 62 and 70, the Social Security Administration jacks up your annual claim by a guaranteed 8%. That’s a very nice pot-sweetener that’s not available in many places.

But I look at life differently these days.

By which I mean that I look at America and the US government very, very differently.

And with deep suspicion.

Albatross-ian debt hangs heavy around Uncle Sam’s increasingly frail neck. Worse is that America’s age of low interest rates is done.

High interest rates is more than likely our norm going forward for many reasons, the primary one being that the world is de-dollarizing, slowly but surely, and that has implications on America’s ability to sell all the debt it needs to sell, which in turn has implications on interest rates (rates will need to rise to attract buyers for all the dinero Sammy’s Treasury Department needs to hawk to the world).

The problem I’m compelled to consider is that the current administration showed a willingness—eagerness?—to cut Medicaid and to begin kicking people off the program starting after the 2026 mid-terms (so very convenient).

There are no comforting words anywhere within government regarding Social Security. Plenty of “small government” Republicans have despised the program since its creation in 1935. Now the GOP has the conservative lawmakers in place to alter the program, which is a stated goal of Project 2025, the uber-conservative playbook for Trump’s second term.

Will that happen?

Who knows?

But the chances of change are far, far greater today than at any other moment in my lifetime.

I’d be foolish not to think about this.

So… I’m thinking.

I’m not saying this is a done deal. Maybe something happens to erase my worries. Maybe a new administration comes in that ensures government won’t monkey with Social Security.

Maybe some mathematical brainiac devises a brilliant plan to shore up the program and ensure its longevity well past my expiration date.

But like I said, I have to now think about this—just in case. Prudence demands I do so.

As it stands right now—and I just looked on the Social Security website—my benefits at age 62 amount to $2,499 per month. If I wait until 67, that jumps to $3,549. At 70, I’d collect $4,400. (All these numbers will change over the next two years as I continue to earn and as the Social Security Administration applies inflation adjustments.)

Here’s my thinking, though to repeat, this is not locked in. At this point, it’s a thought experiment aimed at giving me a base of knowledge I want so that I feel better prepared to pull the trigger—or wait—when January 2028 arrives.

These are the assumptions I’m using in calculating what it would mean if I claim Social Security at 62:

• Monthly benefit amount is $2,499.

• Annual inflation adjustment is 3%, on average. The last decade of inflation adjustments were 2.5%, 3.2%, 8.7%, 5.9%, 1.3%, 1.6%, 2.8%, 2%, 2%, and 0.3%… which comes out to right at 3% on average.

• I have no need for the monthly Social Security cash, since I plan to still be writing and earning an income, so I collect my monthly Social Security check and immediately funnel the money into investments generating a 5% annualized return. I feel confident I can manage that; crypto stablecoins like US Dollar Coin, which shadows the dollar 1:1 yields about 4.1% right now.

Based on those assumptions, what I will call my “Social Security Savings Account” would grow to just shy of $150,000 by January 2033, when I’d hit full retirement age of 67. I could goose that by investing a bit more aggressively, maybe even putting a slice of my monthly Social Security payment into certain cryptocurrencies. But I’ll stick with a conservative 5%.

To be fair, that would mean my income—Social Security check plus interest income from my Social Security Savings Account—would be a few hundred dollars per month less than I’d receive by waiting.

Still, I’d already have $150,000 or so in a big, lump sum rather than just beginning my cash-accumulation phase from $0 at age 67.

With that money, I could fund an immediate, fixed annuity with a remainder-of-life payout that would generate a guaranteed $1,484 per month in today’s dollars, according to Fidelity. (That number would be different a few years from now.)

So, I’d be collecting my $2,499 every month from Social Security, plus $1,484 from an annuity, meaning that all-in I’d be pocketing just under $4,000 per month starting at age 67… which would actually be a bit more than I’d receive from waiting to claim Social Security at 67.

Of course, the big questions that remain are the raison d’etre for this dispatch: Will Social Security still exist in its current form by 2033? Will government have finally decided it has to revamp the program to save the country from financial Armageddon?

Easy to scoff at those questions and believe that Congress will do the right thing and fix Social Security.

Alas, we’re talking about modern government. Two sides that hate each other as much as the Confederacy and the Union hated one another. The Hatfields and McCoys wearing donkey and elephant costumes.

There’s way, way, way too much uncertainty in American politics these days, particularly as it relates to the increasing struggles the US will face in managing its growing mountain of debt and, more pressingly, the annual impact that debt-repayment costs are now having on America’s budget.

Thus, to me, the most prudent option is to start considering all this in light of America’s current political and fiscal situation.

Maybe waiting to claim at 67 or 70 really is, ultimately, the better move when 62 arrives. Or maybe I’ll realize that a better path comes in following the sage advice of Steve Miller and his band: Go on, take the money and run…

UPDATE FROM JEFF’S MAILBAG:

Melissa Writes:

Regarding your recent Social Security article… you seem to be forgetting the cap on earnings until you are 67. If you claim early, the Social Security Administration will claw back $1 dollar for every $2 you earn over the earnings limit. For 2025, the limit is $23,400. So that will change your math.

Jeff Responds:

Sometimes you screw up because you’ve overlooked a variable you forgot about. That’s me. 

Thanks, Melissa, for politely letting me know I’m a knucklehead. 

You’re right, I totally forgot about the clawback provision. I helped my great-aunt, my grandmother, and my mom deal with Social Security issues over the years, but none of them were in a position where clawback was an issue… so based on my experiences, clawback skipped my mind. 

But, yes. Clawback is absolutely an issue I would have confront, given that I do not expect to fully retire at 62 and given that I fully expect my income to remain well above the $23k threshold (or whatever inflation-adjusted threshold exists when I’m 62). 

So, yes, it will very much change my calculus when that day arrives. I will have to wait to run the numbers and see what does and doesn’t make sense. At my income level, Social Security would pretty much clawback everything it paid me, so it will very likely be pointless… and I will be stuck in the same boat with my fellow Gen Xers wondering if Social Security will still be around at 67 in any meaningful fashion. 

Reagan was right about one thing: “I’m from the Government, and I’m here to help” are the nine worst words in the English language.