Social Security dilemma: Collect early and invest vs waiting until FRA - which strategy wins financially?

This is an excellent question, and one I've helped many people work through. The answer isn't as straightforward as some make it seem. For scenario #1 (waiting until FRA): - Pros: Larger monthly benefit for life (~30% more than early filing) - Cons: Missing 5 years of payments, opportunity cost of those funds For scenario #2 (early filing + investing): - Pros: Money in hand sooner, potential investment growth, flexibility - Cons: Permanently reduced benefit, tax implications, market risk The breakeven point is typically around age 80-82. If you live beyond that, waiting to FRA usually wins. But this assumes average market returns. Some other factors to consider: - Your other income sources and tax situation while working - The earnings test - if you're still working, SSA will withhold $1 in benefits for every $2 you earn above $21,240 (2025 limit) - Survivor benefits - if you're married, your spouse's survivor benefit is based on your benefit amount - COLA adjustments apply to your base amount, so larger base = larger COLAs The best strategy really depends on your complete financial picture, not just the SS numbers.

DON'T DO IT!!! I filed early at 62 thinking I was being smart and now I DEEPLY regret it. The reduction is PERMANENT and they don't tell you how badly it affects you later!!! The monthly check difference is WAY bigger than I expected and gets worse with every COLA increase. And don't forget about Medicare premiums that come out of your SS check - larger check means more left after Medicare!!!! The whole "invest the money" thing sounds good in THEORY but in REALITY you won't do it! Most people end up spending it, trust me. And the market can CRASH right when you need the money. I'm 72 now and would give ANYTHING to go back and wait until my FRA. Don't make my mistake!!!

What you need to understand is there's no perfect answer - the Social Security Administration designed the early vs. FRA vs. delayed credits to be roughly actuarially equivalent based on average life expectancy. However, your specific situation creates some complications: 1. The earnings test will significantly reduce or eliminate your benefits while working before FRA. Any benefits withheld are recalculated at FRA, but this greatly complicates the "take early and invest" strategy. 2. Taxes - if you're still working, up to 85% of your SS benefits could be taxable, reducing the amount available to invest. 3. Market risk - the S&P 500 has historically returned about 10% annually, but that's an average with significant volatility. A market downturn early in retirement can devastate this strategy. 4. For married couples, the higher earner's benefit becomes the survivor benefit, so maximizing the higher earner's benefit provides insurance for the surviving spouse. I'd recommend using one of the specialized SS calculators like Open Social Security or Maximize My Social Security to run your specific numbers, including life expectancy, tax situation, and marital status.

my neighbor started collecting at 62 and he says its the best decision he ever made. says life is too short to wait for money thats yours anyway. he went on a alaska cruise with his first check lol

I had a similar dilemma last year. Tried calling SSA for MONTHS to discuss the implications with someone who could look at my specific earnings record. Always got disconnected or waited 3+ hours. Finally used a service called Claimyr (claimyr.com) that got me connected to an SSA agent in under 20 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU The agent was able to run calculations based on my specific work history and showed me that in my particular case, waiting until FRA made more sense because I had some zero earning years that would drop off by working longer. Your situation might be different though.

has anyone run actual numbers on this??? all i see are opinions but what do the REAL calculations show??? I'm in same boat and want to know the math not just what ppl think

Is anyone going to mention how the earnings test basically makes this question irrelevant? If you're going to continue working at a decent salary, you WON'T GET your Social Security benefits anyway until you reach FRA. The 2025 earnings limit for people under FRA is $21,240. After that, SSA withholds $1 for every $2 you earn above the limit. So if you're making $71,240+ annually, your entire benefit will be withheld until you reach FRA. Yes, they recalculate your benefit at FRA to give credit for the months benefits were withheld, but this makes the "take early and invest" strategy impossible to execute unless you're only working part-time.

Dont forget about the STUPID WEP and GPO if you have a pension from non-covered employment!!! THAT will DESTROY your benefit calculations and the SSA reps NEVER mention it until its TOO LATE!!!

my sister took it early and my brother waited and they both complain all the time so maybe it doesnt matter lol. social security isnt enough money either way these days

As someone who's been wrestling with this exact decision for the past year, I really appreciate all the detailed responses here. The earnings test factor that @Everett Tutum and @Aria Khan mentioned completely changes the equation for me - I hadn't fully grasped how significantly it would impact the "take early and invest" strategy. I've been running some preliminary numbers, and it seems like for someone in my situation (planning to work full-time until 67 with earnings well above the limit), the earnings test essentially forces you into a modified waiting strategy anyway. You file early but don't actually receive much benefit to invest until closer to FRA. One question I haven't seen addressed: for those who did take early benefits while still working, how did the annual earnings test calculations work out in practice? Did you find the SSA was accurate in their withholding estimates, or were there surprises come tax time? I'm leaning toward just waiting until FRA at this point, but I'd love to hear from anyone who's actually navigated the earnings test scenario successfully.

One aspect that hasn't been discussed much here is the impact of inflation and purchasing power over time. While everyone's focusing on the math of investment returns vs. benefit amounts, Social Security has built-in inflation protection through COLAs (Cost of Living Adjustments) that apply annually. When you take benefits early at a reduced amount, those COLAs apply to the smaller base benefit forever. So not only are you getting ~30% less each month, but that 30% reduction gets compounded by every future COLA increase. Over a 20-25 year retirement, this difference becomes substantial. For example, if there's a 3% COLA in year 10 of retirement, someone receiving $2000/month gets a $60 increase, while someone with the reduced $1400 benefit only gets a $42 increase. That $18 monthly difference continues forever and gets compounded by all future COLAs. The S&P 500 doesn't offer guaranteed inflation protection - it might keep up with inflation over long periods, but there's no guarantee. Social Security's inflation adjustment is automatic and built-in. Given that @Reginald Blackwell mentioned longevity runs in his family and he's in good health, this inflation protection aspect might tip the scales toward waiting, especially since the earnings test largely negates the early filing strategy anyway.

Reading through all these responses has been incredibly enlightening! I'm in a similar situation at 61 and was leaning toward the "take early and invest" strategy, but the earnings test reality check from several commenters here is a game-changer. What strikes me most is how this decision really isn't just about investment returns vs. benefit amounts - there are so many interconnected factors: the earnings test if you're still working, tax implications, COLA compounding on reduced benefits, survivor benefits for married couples, and the guaranteed inflation protection that Social Security provides. @Monique Byrd's point about COLA compounding is particularly compelling. When you think about a 30% reduction getting magnified by 20+ years of inflation adjustments, that's a significant amount of purchasing power lost permanently. For @Reginald Blackwell specifically, it sounds like the earnings test makes the early filing strategy largely moot anyway if you're planning to work full-time until 67. You'd be filing early but not actually getting much benefit to invest due to the income restrictions. Has anyone here actually modeled the break-even scenarios using realistic assumptions about the earnings test impact? Most of the calculators I've seen don't seem to properly account for this factor, which seems like a pretty critical oversight for anyone still working.

As someone who just turned 62 last month and is facing this exact same decision, this thread has been incredibly valuable! I've been going back and forth on this for weeks, and the insights about the earnings test have completely shifted my thinking. I'm still working full-time making around $85k annually and planned to continue until at least 67. Like @Reginald Blackwell, I was seriously considering the "file early and invest" approach, thinking I could put those SS payments into index funds for 5 years of growth. But after reading about the earnings test limitations, I realize I'd barely receive any benefits to invest anyway. The math that @Effie Alexander provided was helpful, but it assumes you actually receive the full benefit to invest - which clearly won't happen if you're earning above the $21,240 limit. And @Monique Byrd's point about COLA compounding on the reduced benefit base is something I hadn't even considered. What's also concerning is @Lena Kowalski's experience with the administrative complexity. The last thing I want is to deal with annual reconciliations and unpredictable withholding calculations when I'm trying to manage my retirement planning. I think I'm convinced to just wait until FRA. The "guaranteed" higher benefit with full inflation protection seems much more valuable than the theoretical investment gains from money I probably won't even receive while working. Sometimes the simpler path really is the better one. Has anyone found a fee-only financial advisor who specializes in Social Security optimization? I'd love to run my specific numbers with someone who really understands all these nuances.