Several viewers have recently asked me whether it makes sense to claim social security at 62 if you plan to invest the money. At first, it seems like a solid strategy. While your monthly benefit will be lower, you get years of investment returns you’d otherwise forfeit.
It turns out, however, that the issue is a bit more complex. First, depending on your investment returns, claiming social security at 62 may or may not turn out in your favor.
The arguably more important issue, however, is taxes. Claiming social security at 62 could affect everything from how much your social security benefits are taxed to IRMAA premiums or ACA credits. It could also affect a Roth conversion strategy.
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ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I’m the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I’m also the author of Retire Before Mom and Dad–The Simple Numbers Behind a Lifetime of Financial Freedom (
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SS is Federal welfare for seniors.
According to the SS website, my Federal welfare check will be $4,719 per month if I wait until I'm 70. Why would I accept a smaller check???
I learnt to manage my money through investments and it really works for me. They say money can't buy happiness but poverty can't buy anything
Future more potent variations of Covid could evolve in the future and thus shorten some of our lifespans. In addition, Republicans always seem to talk about reducing, sunsetting, re-evaluating, or means testing Social Security in one form or another. Maybe it is better to take benefits sooner before Covid or Republicans strike again.
Why are seniors so greedy? Why the rush to get to the welfare trough at 62??
Rob – this and all your videos are very helpful! Thanks!
Great content. Thank you! I have a pension coming, but no much in my 457(b). I'm thinking of going for the 67 option, though I plan to retire before that and I know that will affect the SS amount.
Are you fat? Do you smoke? If you answer yes to either of these questions, collect at 62.
If you know how to invest,yes invest.
I’m retired at 60. Plan on taking my SS at 62 and investing it in Stock at high return with risk. That works for me. As, it got me to retire early after investing this way. Everyone has a different situation.
Wait until you are 70 to collect Federal welfare. If you need the money before 70 don't retire.
They are genius, work the whole life and at the end they make life extra complicated .
Rob – really enjoy your videos. As you pointed out, there are a zillion ways to define “financially beneficial” when trying to determine if claiming early makes sense. There are so many variables that need to be considered and I have found the only way to figure it out is to build a sophisticated excel spreadsheet that is fine tailored to the individual making the decision. I find most models online way too simple. I think you have to go deep in answering, among others, 2 key questions: 1) What does getting this incremental money enable you to do? And 2) What does getting this money trigger (think marginal tax rates, Medicare premiums, AGI, etc…). In looking at question 1 if getting this money enables you to fund an HSA which you otherwise would not fund – that needs to be modeled….or a Roth IRA….or it enables you to up your 401K contribution to gain your employees match…or enables you to participate in a “friends and family” IPO…. The list goes on and on and on….and the probability of a financial planner or accountant doing it perfect is zero. My point, which is the same point you so eloquently made, is that to get a precise answer on this is difficult. Ive been modeling this for over 20 years (I’m 61 and newly retired) on the same spreadsheet with new “tweaks” every year….it’s kinda fun for a finance/spreadsheet jockey like me….I be come to one conclusion when people ask me this question….and the answer is: “It Depends”…… Keep making great videos!
Thanks for this video, Rob. Very useful and informational, the IRMAA component is something a lot of seniors take into account even just trying to setup Part B or Original Medicare. It is really complicated.
Life is not always about how much money you have. But, I did the calculations and started drawing at 62 and kept working part time until 65. Entire check each month was and still is invested in Vanguard Municipal Bond Fund in a Joint taxable account. 12 years later between the tax free dividends (still reinvested) I have far exceeded what I would be drawing if I has waited to full retirement age. Plus I have a 6 figures balance in the fund now.
Rob, have you (or anyone) considered what might happen if the SS trust runs out and that if at some year in the future (say 12 yrs from now), our SS payout is reduced by 33%? Then if we started earlier (at 62) we might have 8 more years at the PRE-Reduced payout that might be applied to all of us in 2034. Or worst yet, what if the higher end SS payouts are reduced more than the lower end payouts (because obviously the "rich" can take a SS hit better than the "poor")? I just am not convinced that holding out is the best strategy for everyone. Plus you didn't talk about (or consider) that if you wait until 70 to start SS, and you've been holding back drawing from your tax-deferred 401k/IRA, that at 72 you will need to start pulling out RMD from your retirement accounts. That coupled to your higher SS payouts could end up putting you into a higher tax bracket. Plus, don't you think you will want to spend more when your are in your younger retirement years and in better health and have better mobility? If you wait until you are 70, sure you might have a greater income in your 80s and 90s, but we know that most of that money will go to IRMAA Medicare surcharges, Medigap premiums and Long Term Care facilities.
My hope and strategy is to use the 12% tax bracket withdrawal methodology, since I won't need much – debt free – and don't have but 700K in a 403(b). Take the maximum I can from my plan to stay in the 12% bracket and if I don't spend it (45K per year) then invest the rest and do this until 72….it's a plan, I'm a year out from retirement at 62 1/2 and plan to collect SS at 65.
Great video. I am trying t sort this out. Retire at 55 in thee years with a pension and I want to do 401K -Roth IRA conversions before RMD's . This means I want my taxable income as low as possible from 55 to 70ish to pay less to convert. It also mean 85% of my SSA will be taxable which makes me want to wait until my conversions are done.
Our tax code is insanely complex.
Taking it at 62 if it's even an option when I get there and the whole system hasn't collapsed. I will try to just live off of it while my wife still works (several years younger) and since we have no debts and I will be on her insurance, I will leave my money accruing/DRIP to use later.
Fucking all this is lie ,every thing is false
How much importance should you put on the fact that the accumulated benefit that was invested becomes part of your estate when you die?
The assumption that a person lives into their 80's is optimistic. Many people today (2/20/2022) are living paycheck to paycheck. * That unexpected $ 400.00 bill for whatever is a tremendous struggle for many to meet.
I did enjoy your video and found it interesting, but practically speaking, collecting monies due . . . I will do it at 62.