With one piece of critical information, I can tell you exactly when to claim your Social Security.

Ok… ready?

When will you (and, if married, your spouse) die?

Tricky, huh?

That’s what makes Social Security one of the most misunderstood decisions in financial planning. People desperately want a simple answer:

“Should I take it at 62, full retirement age, or wait until 70?”

I’ve become convinced that’s the wrong question. The real question is:

How does Social Security fit into your family’s broader financial plan?

The “Break-Even” Trap

One of the first calculations people make is the break-even analysis.

“If I delay until 70 instead of claiming earlier, how old do I have to live before I come out ahead?”

It’s a reasonable question. After all, for every year you delay claiming after your Full Retirement Age, your benefit permanently increases by roughly 8% until age 70.

That sounds like an incredible deal.

But it’s not free.

Every year you delay is also a year you’re giving up a year’s worth of Social Security checks.

Depending on the ages being compared and assumptions used, the math often works out such that you need to live into your early 80s – roughly age 82 to 84 – before the higher monthly benefit overtakes the years of payments you skipped.

That’s where many people stop.

They shouldn’t.

Your Social Security Decision Is Rarely Just About You

Spouses almost never have identical earnings histories. One benefit is often materially larger than the other. Which means we’re no longer trying to maximize your benefit. We’re trying to maximize the family’s.

Sometimes that means the lower-earning spouse claims earlier.

Sometimes it means delaying the higher earner’s benefit – not because they’re likely to live longer, but because they’re more likely to die first.

Yeah… that’s an uncomfortable sentence to write.

It’s also one of the most important conversations we have.

After all, the surviving spouse doesn’t continue collecting both checks. They keep the larger one.

One of Retirement’s Best Inflation Hedges

Here’s another, often overlooked, point.

Inflation can derail even the best laid retirement plans, and retirement assets don’t automatically keep pace with inflation.

Your investment portfolio might.
Your pension probably doesn’t.
Annuities often require paying extra for inflation protection – and even then, increases are frequently capped at 3%.

Social Security is different.

Each year, benefits are adjusted based on inflation through the annual Cost-of-Living Adjustment (COLA).

During the inflation surge following COVID, consumer prices rose at the fastest pace in four decades. In response, Social Security benefits increased 8.7% in 2023 – the largest cost-of-living adjustment in more than 40 years.

That’s a feature that deserves more attention than it gets.

Mortality Matters

There’s one more uncomfortable reality.

In many marriages, one spouse will outlive the other. Statistically, that’s often the wife – but every family is different.

If the higher-earning spouse dies first, the surviving spouse generally steps into the larger Social Security benefit.

That means delaying the larger benefit isn’t just increasing one person’s monthly check, it may be increasing the surviving spouse’s guaranteed, inflation-adjusted income for decades.

Suddenly, the decision isn’t about maximizing one lifetime. It’s about protecting two.

There Isn’t A Universal Right Answer

I’ve had clients with significant health issues who claimed early and never looked back.

I’ve had others delay until age 70 because they wanted the largest possible guaranteed income later in retirement.

I’ve had couples where each spouse claimed at different ages because that combination best fit their goals.

Every one of those decisions was correct.

Because every one of those families had different priorities, different health, different assets, and different risks to manage.

Good Financial Planning Lives In The Gray

The longer I practice, the less I believe financial planning is about finding perfect answers.

The goal isn’t to maximize Social Security.

The goal is to maximize the probability that your retirement works – regardless of what the future has in store.