Should I claim Social Security early (around 66) or delay to 70?

Oct 3

Written By Erik A

Treat the choice like an investment. Delaying from 66→70 “earns” an implicit real return of ~2–5%/yr (depends on longevity). If your after-tax portfolio return can reasonably target ~4–6%/yr, the math, flexibility, and legacy options usually favor taking the check at 66 and investing it.

The Clean Math (Fast)

Early (66) benefit: $2,500/mo
Age-70 benefit (~+32%): $3,300/mo
Raise from waiting: $800/mo
Checks forfeited by waiting: 48 × $2,500 = $120,000

Undiscounted break-even:

120,000800=150 months≈12.5 years⇒age 82.5800120,000=150 months≈12.5 years⇒age 82.5

If you don’t expect to live past ~82½, taking at 66 wins even before investing.

What Waiting “Yields” (Your Hurdle Rate)

Internal rate of return (real, approx.) on delaying to 70:

Live to 85 → ~2.0%/yr
88 → ~3.5%/yr
90 → ~4.3%/yr
95 → ~5.4%/yr

Translation: If you can net ~4–6%/yr after tax, take-now + invest generally outperforms wait-then-collectacross most lifespans.

Turn Checks Into an Engine (66→70)

Invest $2,500/month for 48 months, then from age 70 use the pot to “self-fund” the $800/mo gap vs. the age-70 check.

0%/yr: $120k → funds gap 12.5 yrs (to ~82.5)
3%/yr: ~$127k → ~16.8 yrs (to ~86.8)
6%/yr: ~$135k → ~29 yrs (to ~99)
10%/yr: ~$145k → interest alone (~$14.6k/yr) covers the $9.6k/yr gap indefinitely

Rule of thumb: To “match” waiting through age 90, you need roughly ~4.3%/yr after tax. That’s a low bar for a disciplined equity tilt.

Where UPRO Fits (3× S&P 500)

Pro: Higher expected return → stronger odds the engine beats the delay IRR.
Con: Sequence risk + volatility decay. A bear during 66–70 can mark down your fresh contributions.
ACG stance: You don’t need leverage to clear a ~2–5% real hurdle. If you use UPRO, do it with position sizing, rebalancing, and a glide path that de-risks as 70 approaches.

Nuances That Matter (Skimmable)

Survivor benefit: Delaying raises the survivor check. If spouse income security is the #1 goal, delaying is a valid insurance move.
Taxes: Up to 85% of SS can be taxable; investment gains are taxable too. Compare after-tax returns to the delay IRR.
Earnings test: After FRA, wages don’t reduce benefits—another nudge toward taking at 66 if you’re still working.
Longevity: The longer you live (well into 90s), the more valuable the bigger guaranteed check becomes.

ACG Playbook (Do This)

Set your hurdle: Use the IRR table (aim for ≥4–6%/yr after tax).
Automate the engine: Invest each monthly check 66→70; don’t let cash idle.
Control sequence risk: Consider a 70/30 → 60/40 glide path into age 70; rebalance annually.
Hybrid for survivors: Take at 66, but earmark a slice of cash flow for a deferred annuity starting at 80–85.
Review annually: Markets, taxes, and health change—re-underwrite the plan each year.

The ACG Takeaway

A dollar today beats a bigger dollar tomorrow—if you have even a moderate-return engine. For most investors who can target ~4–6% after tax, take at 66 and build the engine wins on math and optionality. If survivor protection or exceptional longevity is your top priority, delaying is a strategic insurance choice—just call it what it is.

Education, not individualized advice. Coordinate with your advisor and tax professional before implementing.

Erik A