If you are in your early 60s and staring at the Social Security claim button on SSA.gov, the most expensive mistake you can make is treating that decision like a stock trade. I’ve been covering retirement income strategy for more than a decade, and the claiming decision remains the single highest-leverage move most households will ever make. Financial advisor Julia Lembcke, speaking with Adam Taggart on the Thoughtful Money podcast episode “This Simple Strategy Can Save Retirees Thousands (or More),” put the math in language anyone can act on:
“Between 62, the earliest you can take it unless you’re a widow or widower, between 62 and full retirement age, which is 67 now, those 5 years, your benefit, what’s paid to you, is increasing by 8% to 10% a year, guaranteed, right?”
The stakes are simple. If you claim at 62, you are betting your retirement income floor against a benchmark almost no risk-free investment can clear. Get it wrong and you lock in a smaller monthly check for the rest of your life, and a smaller survivor check for your spouse.
The 8% to 10% annual guarantee
Lembcke is right. Social Security’s benefit formula permanently reduces your monthly check if you file before full retirement age of 67 and raises it if you wait. For each year a person claims prior to the full retirement age, benefits are reduced by about 6.7%. Once you pass full retirement age, delayed retirement credits keep accruing until age 70.
Stack those together and you get what Lembcke describes: a guaranteed 8% to 10% annual increase in your monthly benefit for every year you wait from 62 to 67. No equity index gives you that return without risk. No bond ladder gives you that return at all. In my view, it is one of the few genuinely risk-free compounding rates available to an American household, and the only way to capture it is to not claim.
This is why Lembcke pushes back hard on the “take it early and invest the difference” pitch. Her reframing is the pivot point:
“Your Social Security is a pension. It’s not supposed to be an investment, right? It’s supposed to be a foundation of income in retirement.”
Treat the check as a pension and the decision changes shape. You are setting the size of the floor that pays you every month for the rest of your life, indexed to inflation, regardless of what the market does.
Waiting too long is also a mistake
Delaying is not automatically the right move. Lembcke is blunt about the other failure pattern:
“Sometimes people take it too late. They want to wait until 70 and get that full amount. And when I run the calculations, that’s almost never both spouses taking it at 70, maybe one, but usually it’s between full retirement age and 70 years old is the ideal time to take it from a maximization standpoint.”
“Wait until 70 no matter what” is a slogan. The right answer is calculated case by case.
For couples, the decision comes down to who is left holding one check. Lembcke’s survivor logic:
“When one spouse passes away, you’re only left with one check, and it’s the higher of the two. So if you blow that high check early and, you know, you’re left with one check, it’s going to be lower.”
If a couple decides one of them has to claim before full retirement age, her rule flips the intuition most people start with: “If you do, you know, really want to pull a benefit early, that you pull the lower benefit first.” The higher earner keeps growing the benefit that the surviving spouse will eventually inherit. The lower earner’s check is the one you are willing to shrink, because it disappears when the first spouse dies anyway.
Clark Howard makes the same point from a different angle, noting that if the higher wage earner delays Social Security, the surviving spouse will receive the higher benefit for the rest of his or her life, with the break-even point on delaying typically falling somewhere around age 83.
What to do before you file
- Pull your benefit estimates at 62, at full retirement age, and at 70 from SSA.gov’s my Social Security tool. The 8% to 10% annual step-ups will be visible directly in those numbers.
- If you are married, run both spouses’ estimates side by side and look at the survivor outcome, not just the joint outcome while you are both alive.
- Layer in health, other income, pensions, and tax bracket. A claimant with a serious health condition and no spouse has a very different calculation than a healthy 62-year-old married to a younger, lower-earning partner.
- If the math is close, pay for a one-time fiduciary review or a paid Social Security optimizer. The decision is irreversible after 12 months.
Taggart found the conversation deep enough that he floated the idea of turning it into a dedicated series, which tells you how much nuance sits underneath a decision most people make in an afternoon. Between 62 and 67, your benefit grows at a rate the market cannot guarantee. That is the number to beat before you claim a dollar early.
