When Should You Take Social Security?

When people ask, “When should I take Social Security?” they usually want a definitive answer.

They want to know what’s best, objectively.

But the question is framed the wrong way.

It isn't about what’s universally right. It’s about what makes the most sense for your situation. 

Social Security's actuarial tables are built around the entire population. On average, you shouldn’t expect to outsmart them.

There are a few things we can estimate but never know with certainty. Lifespan is a good example. Even if both of your parents lived into their 90s, that doesn’t guarantee anything for you. You might live to 110, or die in a plane crash at 72.

Stock returns also factor into the opportunity costs surrounding Social Security. But while we can make reasonable assumptions about long-term returns, the next 3-5 years are far less predictable.

There may be some marginal benefit to optimizing one way or the other, but any advantage is likely to be small relative to the uncertainty involved.

Political concerns creep into this decision too. Will Congress cut benefits? By how much? Or will they find other ways to fund the program?

Many people speak about these questions with certainty, but the truth is that no one really knows how this will shake out. Not even the people in Congress.

This line of thinking also tends to invite a lot of fear, and fear is anathema to good decision making. Politics is hardly an unemotional arena. When the other party is in power, the perceived likelihood of a bad outcome rises. 

Asking, “What’s the optimal claiming age?” is like asking, “What’s the best car?”

Best for whom?

The best car for you might be a Subaru Outback. Your neighbor might prefer a Toyota Tacoma. Both are excellent vehicles, but they solve different problems.

The better question for Social Security is: “What works best for your life?”

• Is it more important to maximize guaranteed income?

• Or are you more concerned about drawing down your portfolio too quickly in your 60s? 

• Is there an urgent cash-flow or liquidity need?

• Do you prefer more flexibility early on, or greater stability later in life? 

• How important is protecting a surviving spouse?

The math between claiming at 67 and 70 is often surprisingly close. What tips the decision usually isn’t a spreadsheet projection, but personal preference. 

Some people sleep better knowing they’ve locked in the highest inflation-adjusted income for life. Others prefer keeping more assets accessible sooner, even if the guaranteed check is smaller.

Regret usually doesn’t come from the decision itself, like claiming at 67 instead of 70. 

Instead it comes from acting impulsively, or letting fear dictate your decision. It can especially come from copying someone else whose temperament, preferences, health, and financial situation are different from your own.

Pundits on TV or YouTube will tend to argue as if there is a single right answer that works for everyone. In my experience, that just isn’t the case. Such conclusions tend to lean heavily on unknowable variables, as if a specific outcome is a foregone conclusion. 

But people usually make better decisions when they focus on what is knowable about their own situation, and how they want to structure risk in retirement. 

The goal isn’t to “outguess the system.” 

The goal is to make a decision that aligns with your opportunities, your needs, and your risks.

That’s a much more useful conversation.