You see a lot of poorly qualified or unqualified advisors (especially the right-wingers looking for a get rich quick scheme) suggesting that there is merit to waiting on your Social Security retirement to “maximize” monthly benefits. This is mathematical horse hockey. Let’s look at the practical implications.
When you do the math, there is really no such thing as a “full” retirement age. The reality is that you can take retirement any time between 62 (the earliest you can claim) and 70 (max benefit). The earlier you start, the less monthly income you will get. But the bitter pill is that whatever your MONTHLY benefit is, it is calculated that by your expected age at death, you will get the same total amount. From an actuarial point of view, you gain absolutely nothing by starting benefits after the mythical “full” retirement age.
Oh, you might “cheat” the actuaries by a number of years by stubbornly surviving longer, and come out a bit ahead. But there are real-life negative consequences to this decision to “maximize” monthly income.
You don’t know whether you’ll die in a car crash at age 63, of illness at “full” retirement age, or of old age at 103. That means that by waiting to “maximize,” you might never collect a penny. $0 is a pretty crappy deal.
On the flip side, being less “frugal” and starting “early,” regardless of your finances, may make much more sense for several reasons:
1. It may make it possible to live better, worry less, afford better insurance, work less, have better food and medical care - all manner of things that not only improve quality of life, but tend to extend it as well.
2. If you don’t need the money, that’s ok. In your hands, the funds can be invested. The returns may be better than the conservative increase in Social Security benefits.
3. In a time of need, the money will be immediately available.
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