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Taking Social Security at 62 vs FRA - invest early benefits or wait for higher monthly amount?

I'm struggling with what feels like the eternal Social Security question - take reduced benefits at 62 or wait until my Full Retirement Age (67) for the larger monthly amount. My situation: I'm 61, wife is 59, and we're both still working but planning our exit strategy. What keeps nagging at me is: what if I wait until 67 for the higher benefit but die before collecting much? All that money I could have had from 62-67 would be gone forever. I've been toying with an alternative approach - claim at 62, invest those benefits until 67, then live off that nest egg + the reduced SS payment. My rough calculations: If I take approximately $2,100/month at 62 instead of $3,125/month at 67, I could invest that $2,100/month for 5 years. By the time I hit 67, I'd have a decent investment fund PLUS still get the $2,100/month for life. If I happen to die at 67, my wife gets survivor benefits AND that investment fund. Am I missing something major in this plan? Has anyone tried this approach? I know the break-even point would be pushed much further out this way, but it feels like insurance against dying "too soon" after waiting for benefits.

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22 comments

Zainab Ismail

•20d

This is a common misconception. Social Security isn't designed to "keep your money" if you die early. The system is actually actuarially neutral - meaning on average, people receive approximately the same lifetime benefits regardless of when they claim. Early claiming gives smaller amounts for potentially longer, later claiming gives larger amounts for potentially shorter periods. Individual outcomes vary based on longevity, but the system isn't designed to profit from early deaths.

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Yara Nassar

•20d

While your approach is logical, here are some factors to consider: 1. Survivor benefits: If you're the higher earner, waiting increases your wife's survivor benefit should you pass away first. Even if you claim at 62, your wife would receive your benefit amount (including any reductions) as a survivor benefit. 2. Investment returns: Your strategy requires sufficient returns to overcome the 30% permanent reduction in monthly benefits. Current market conditions matter. 3. Life expectancy: If you're in good health with family history of longevity, waiting might provide more lifetime income. 4. Working while claiming: If you continue earning substantial income before your FRA, your benefits will be reduced by the earnings test (though recalculated later). This isn't a one-size-fits-all decision. Have you looked at your specific earnings record on my.ssa.gov and run some calculations?

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StarSailor}

•20d

Thanks for these considerations. Yes, I've checked my earnings record, and I'm the higher earner by about 40%. The survivor benefit angle is something I hadn't fully considered - that 30% permanent reduction would affect her too if I go first. I'm in decent health (some high blood pressure but managed), and have family members who lived to late 80s. The earnings test is definitely a factor since we both plan to work part-time until 65. I guess there's no perfect answer here.

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Paolo Ricci

•20d

I had the same frustrating experience trying to reach SSA about my retirement application. After my third disconnection, someone recommended I try Claimyr.com - it's a service that basically waits on hold with SSA for you, then calls you once they reach an agent. Worked perfectly and saved me hours of waiting. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU. The agent I eventually spoke with was actually really helpful about my specific claiming strategy questions.

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Zainab Ismail

•20d

This is something I help clients analyze frequently as a retirement planner. Let me offer some objective insights: 1. The 8% annual increase in benefits from FRA to age 70 is guaranteed - very difficult to match consistently in the market after taxes. 2. Consider the "insurance value" of higher benefits: protection against longevity risk (outliving savings) and inflation protection via COLAs on a larger benefit amount. 3. Tax efficiency: Only 0-85% of SS benefits are taxable, while investment gains are typically fully taxable at capital gains rates. This creates different tax scenarios. 4. Spousal coordination: If your wife will claim on your record, your filing choice impacts her spousal benefit amount as well. 5. Have you considered a hybrid approach? Some clients claim at 62 but only spend a portion while investing the rest, creating both immediate income and future reserves. The break-even age considering simple math is typically around 78-82, but when accounting for taxation, survivor benefits, and potential investment risk, this analysis becomes more complex and often favors delayed filing for at least one spouse.

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StarSailor}

•20d

Thank you for this detailed response! I hadn't considered the guaranteed 8% increase that way - you're right that it's hard to match that consistently in the market. The point about taxation is important too. My wife has her own work record that's decent but not as high as mine. She was considering waiting until her FRA while I claimed early, but I should look more at how that impacts her spousal benefits. The hybrid approach sounds interesting - getting some immediate benefit while still preserving the strategy's advantages. I need to think more about this.

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Yara Nassar

•20d

One additional factor to consider: market sequence risk. If you claim at 62 and invest those benefits, but the market experiences significant downturns in those first few years (2025-2027), your investment strategy could underperform dramatically. The guaranteed increases from delaying Social Security aren't subject to market volatility. Also, while it's unpleasant to think about, have you calculated how your early claiming strategy affects your wife's survivor benefits if you predecease her by many years? If she has a longer life expectancy (which is statistically likely), maximizing the survivor benefit by delaying your claim might provide better lifetime household income, even if you personally don't reach the break-even point.

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StarSailor}

•20d

The market sequence risk is something I hadn't fully considered. You're right that a major downturn right after I start investing could really damage the strategy. Regarding survivor benefits - my wife would get my benefit amount when I die, which would be 30% less if I claim at 62 vs waiting until 67. Given that women typically outlive men and my wife is younger than me, this is definitely something to factor in. If she ends up collecting survivor benefits for 15-20 years, that reduced amount would significantly impact her.

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Zainab Ismail

•20d

The rules changed with the Bipartisan Budget Act of 2015. Currently, you can suspend benefits only after reaching your Full Retirement Age (FRA), not before. If you claim at 62, you would receive reduced benefits until FRA, at which point you could suspend. While suspended, your benefit would earn delayed retirement credits of 8% per year until age 70 (or until you restart). However, this wouldn't undo the reduction from claiming early. Your eventual benefit would be the reduced amount plus the delayed credits - not the same as waiting to claim at 70 initially. Additionally, during suspension, no one can receive benefits on your record (like spousal benefits), and you cannot receive benefits on anyone else's record. Medicare premiums normally deducted from SS would need to be paid directly during suspension.

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