Why I'm Taking Social Security at 62 (And Why the "Wait Until 70 Crowd" Might Want to Pay Attention)

Tyler Gardner (0:00)

Your capacity to enjoy your life is not linear. It peaks, it declines. The go-go years are finite, and then they're gone. A dollar deployed during those years returns something that $1.82 simply cannot. And why wouldn't you want to enjoy the memory for longer?

Hello friends, this is Tyler Gardner welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance and investing. So let's get started and get you one step closer to where you need to be. Before we get into today's episode, I am genuinely thrilled to share this with you. After three years of listening to your questions and locking myself in a room to answer as many of them as I can, I decided it would be slightly more efficient to write a book. So I did. It's called Real Wealth, published by Norton out December 6th of this year. Yeah, the kid whose parents thought he might be illiterate until he was 21, and whose high school English teachers passed him on the condition he never took another English class, and I'm dang proud of how it turned out and what I believe it can and will do for all of you. Here are three quick reasons to preorder right now, and I'll tell you exactly how at the end. One, you'll actually finish this book. I know, low bar, except it really isn't. I've spent two decades watching people's eyes go blank the moment I said asset allocation. I took that personally. This is my response. You know the look, and I refuse to be the cause of it. Number two, the number one comment I get thousands of times is, you left something out. You're right, I'm making 60-second videos about topics that deserve 60 minutes. This is my answer, everything in one place, no countdown clock, no algorithm cutting me off. Number three, what I'm most excited about, every month through December, I'll be releasing an exclusive pre-order incentive, and April's might already be my favorite. Pre-order this month and you're automatically in for a free two-hour live event on Wednesday, May 6th. Where I'll be expanding on some of the ideas present in the book, and answering some of your most commonly asked practical and theoretical investing questions. This will be exclusively for people who pre-order. Here's all you need to do, go to tylergardner.com, pre-order the book, then click the button on the page that says you've pre-ordered. Two minutes, you're in, and I genuinely cannot wait to do this with all of you. Real Wealth, December 6th. Your future self will appreciate having an all in one place. And now on with the show.

All right, welcome back to Your Money Guide on the Side. I'm Tyler Gardner, and today we're talking about one of the most Googled, most argued about, most deeply personal financial decisions you're ever gonna make. When to take Social Security. Specifically, and I want to be up front about where I'm coming down today, we're going to make a serious, data-backed, intellectually honest case for taking it at 62, which is the earliest you can take it, which is also the answer that approximately every financial planning textbook and every financial planner will tell you is 100% wrong. And there's nothing I love more than being told I'm wrong by a textbook and by traditional financial advice. Game on. Let's roll. Now, I'm not going to tell you that taking it at 62 is the answer for you. That's not how the show works, and it's not how any of my content works. What I'm going to do is give you the real math, the break-even math that the textbooks actually agree on, but don't always present clearly, and then give you six questions to ask yourself that are worth more than most spreadsheets I've ever come across. Because this decision, at its core, isn't a math problem. It's a life problem that has some math attached to it. We're also going to spend some time talking through some ideas presented by Bill Perkins from his book Die With Zero. And if you haven't read it, you should. And if you haven't checked out my interview with Bill from a few months back, you also should. I recommend that book roughly every third episode because it genuinely is one of the most clarifying things I've read in 20 years of thinking, writing, reading, and talking about money. And crucially, because I have made this mistake in past episodes, and my inbox reminded me of it immediately, we're going to talk about two things that most social security conversations completely skip over. A. What happens to your health care if you retire at 62? And B. What happens to your social security benefit if you take it early but you're still working? Both of these can completely change the numbers and your decision. Both of them deserve their own section, thus both of them are going to get one. And at the end of today's episode, I'll even leave you with a cheat sheet, an actual, usable, write-this-down cheat sheet. I'll also put it in this week's newsletter as well, which you can sign up for along with 175,000 other loyal and awesome readers at tylergardner.com. And while you're at it, a very familiar ask, if you have found this show helpful in any way or learned anything about your financial future, please consider leaving a review on Apple, Spotify, or wherever you listen to your podcasts. It helps the show grow, it helps new listeners find it, and we all know we would love to share this information with even more people. All right, let's get into it. We're going to start with a brief introduction to what Social Security actually is. I promise I'll make it as brief as I can. But I find that a surprising number of people don't fully understand the mechanics of Social Security, and the mechanics matter for the decision. Social Security is, at its core, a longevity insurance program. You paid into it your entire working life. In exchange, the government promises to pay you a monthly benefit for the rest of your life, however long that turns out to be. If you live to 72, you collect for however many years you started. If you live to 102, you collect for however many years since you started. The monthly check doesn't stop, at least as of the date of this recording. The question is purely, when do you start the check? And here are the three numbers I think you need to know. 62 is the earliest you can claim. Your benefit will be permanently reduced, roughly by about 25 to 30 percent below your full benefit, depending on your birth year. 67 is full retirement age, for most people born after 1960 This is what the Social Security Administration considers your full benefit, the baseline number. And 70 is the maximum. Every year you delay past full retirement age, your benefit grows by about 8 percent. At 70, you've maxed that out. There's no benefit to waiting longer than 70 None. Zero. The government is not going to reward you for your patience past that point. So, in round numbers, and yours will differ based on your earnings history, which you can find at ssa.gov by creating an account today. Imagine your full retirement age benefit is $2,000 a month. If you took it at 62, you'd get roughly $1,400 a month. At 67, you'd get the full 2,000. And at 70, you'd get roughly $2,480.