Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

The Shocking Statistics Behind When People Collect Social Security

• Ari Taublieb, CFP®, MBA • Episode 296

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Choosing when to collect Social Security is one of the most stressful retirement decisions people face, and it doesn’t have to be.

In this episode, Ari breaks down how most people actually decide when to claim Social Security, why there is no single “best” age, and how to think about the decision without fear or guesswork. Using real data and real-world scenarios, the focus stays on understanding trade-offs rather than chasing a perfect answer. 

Listen as Ari explains why some people claim as early as 62, why others wait until full retirement age or later, and how factors like income needs, longevity, and spousal considerations influence the decision. It also highlights why calculators alone often miss what matters most, and why peace of mind plays a bigger role than people expect. 

This is for anyone approaching retirement who wants a clearer, calmer way to think about Social Security and make a confident decision that fits their life.

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The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.

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Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.


SPEAKER_00:

Most people stress like crazy when it comes to collecting Social Security because they don't want to get it wrong. And I don't blame them. It's the difference of potentially tens, if not hundreds, of thousands of dollars. So you want to get it right, but you don't need to stress about it when it's going to be one decision you make in a few minutes at some point that's going to dictate how much income comes in. So what I recommend is just understanding what do most people do, which is what I'm going to explain today. And it doesn't mean you have to follow that, but you might hear something that goes, wow, that rationale, yep, that's what I'm thinking, and I'm going to collect at 62, and this makes sense to me. And then you could be done worrying about this. And part of my job as I view it is to advise you on here's something you might just not know about asset location or Roth conversions or healthcare planning. And here's something that you've probably thought about for a very long time, or you might know that it's going to be something you're going to worry about that hopefully you no longer worry about because it will been explained in a way that resonates with you. So as a reminder, my name is Ari Taubleieb. I'm a certified financial planner and host of the Early Retirement Podcast. I'm also the chief growth officer at Root Financial. So if everything today just lights you up where you're like, oh my gosh, I love this. Like when I'm in retirement, I'm going to be doing tax strategy and healthcare, and I don't want to travel because I'm going to be looking up different tax laws. We might not be the best fit for you. And you probably will want to manage on your own. If you're like, wow, you love this stuff, and I think your team loves this stuff. Well, that's of course what we do here. So if you're listening to this, going, wow, I want some help like this, you can go to our website, rootfinancial.com, and talk to an advisor today. Now, what I'm going to explain first are some stats. And some of these stats might surprise you. Some I think you're going to go, yep, it's kind of what I thought, but it validates it. But I'm going to start with my little Social Security story because this is what I think a lot of you will resonate with. And so the story is someone who came and said, What's the best time to collect? And I said, if there was a best time to collect, it'd be very simple. I would just tell you it's this age or that age, but it's not that way. And that's why Social Security gets so much hype on YouTube, on different articles, because there's a lot of fear that you can drive people into thinking about, which gets them more clicks and more ad dollars, which is the exact opposite approach I tried to take. I just want to give you the straight logic, you can make a decision and be on your way. So with Social Security, the way I'm going to recommend you think about it is in this following kind of three questions. Question one, do you need income? If you're like, I want to retire and I could literally not survive because I just don't have enough money, there's a reason to turn on Social Security. If that helps you live your ideal life where you have your health and your energy in your early years, that's something to consider. Like, do you need income? That's number one. Number two, what are you going to regret less? I'm not saying that you're worrying about the following, but many of you are worrying Social Security will go away. Maybe not entirely, but if you're thinking, you know what, I paid into this thing for 35 or 40 years. I could not live with myself if I paid into this thing, and then all of a sudden I go, I want to turn it on, and it's at 75% of what it should be, or 50%. I'm just going to be kicking myself. Now, people have been saying that's going to happen for a very long time, and it has not happened. But you might feel a concern there, which would be a valid concern because there is proof, not my opinion, that more people are collecting Social Security versus those paying into it. So if that's how you're thinking, you might go, you know what? Maybe I do turn it on a little quasi too early. But if I'm going to sleep better at night because I turn it on early, knowing, hey, now I'm going to be collecting this amount starting right away, you're just going to feel better. It's something to consider. It's not the reason to collect, but I would consider that as something that most people might go, well, just run the finances. I know a lot of advisors will say, well, just do whatever the calculator says. Well, you're not a calculator, so I don't recommend that. And then number three is what's most important to your spouse? If you're single, you could ignore that question. But if your spouse is someone who you know maybe is not as financially savvy as you, and I don't really like using that phrase because it's not who's more savvy, that's not who wins. But maybe you're the one, if you're listening to this podcast or YouTube video, who likes finances a little more. And if that's you, you can be honest and let me know in the comments. And I think that's a cool thing, not a bad thing. And anyway, you're the one who likes finances like me. But what happens generally is you'll maybe think, maybe I should turn on Social Security early, maybe I could invest it and do even better than what you know the government's gonna do. And I'm such a brilliant, you know, investor. Just joking around here. But maybe that is a part of you. Well, another part of you might think, well, if I were to turn on at 62, and God forbid I pass away due to a health event or otherwise at 68, I would be kicking myself because that means my spouse is only gonna get the amount that I started collecting for the rest of their life, as opposed to if I delayed, they would have been able to receive that amount for the rest of their life. So if they delayed until 70 and passed at 71, well, if you start collecting at 70, they're getting, let's call it maybe 4,000 a month compared to potentially 1,500 a month for the rest of their life. So it really is a team decision. Now, here's what the stats say. Now, before I explain this, please tell me what your plan is to collect Social Security because it helps everyone make a better decision. You might say something in the comments or send me an email that I'll highlight in a future video that will make someone go, wow, that's a point I'd not consider. That's an angle I didn't know. So obviously I love this stuff and I could do a 12-hour podcast on this, which maybe I will. But for now, I'm gonna stick it to just a few minutes so that you guys can be on your way today. In terms of the stats here, according to data from the Social Security Administration, 23% of men and 25% of women begin collecting at age 62. Now, is that what you thought? Did you think less people? Did you think more? Once again, I like hearing your feedback. It makes this more fun for me. So thank you for letting me know. Now, the percentage of people claiming at age 62 has been declining dramatically over the past two decades, dropping from around 60% in the early 2000s to less than 30% by twenty twenty-three, according to Northwestern Mutual. So for comparison, in 2014, 35% of men and nearly 40% of women began receiving benefits at age 62. So it prompts the question: why? Why are more people claiming later? Maybe it's because we're living longer, maybe it's because people are finding I'm working longer and I don't want to turn on Social Security and interrupt anything else going on. There's many different arguments here. Now, full retirement age was the most popular claiming age for both sexes, with 28% of men and 26% of women beginning benefits at this age, and that's according to NerdWallet. So full retirement age is the single most common claiming age, more popular than age 62 or any other age, like 64, 68, 70. Why do you guys think this is? I know why this is. This is because of a little thing called framing. Full retirement age. It sounds like, oh, that's when I get my full benefits. It's a framing that really aligns with people. It's like, well, I didn't collect it as early as I can. And yeah, I could wait till 70, but gosh, full retirement age. And once it hits full retirement age, the reason I think this is fascinating, because once again, I find all of this fascinating, at full retirement age, once you delay, you get a significant bump. 8% every single year you delay. So why is this interesting to me? It's fascinating because there would be a bigger argument in my head of people to start collecting at 68 or 69. Why full retirement age? If you get to full retirement age and you get a benefit of about 5.5% growth or so every year that you delay from 62 to 63 and so on, all the way to full retirement age. Once you're at full retirement age, then you get an 8% bump, a guaranteed 8%. So if the stock market historically does 10% per year, if you're just looking at the SP 500, a reminder, it never has once done 10%. That's just the average. Might do 20%, might do negative 20%. So the reason I find this interesting is you could guarantee an 8% benefit. And I know there's a lot of people that will delay, but the fact that the most common claiming age is full retirement age because it just works with people based off breakeven analysis, how long they think they're gonna live, that's interesting to me. Um, in 2022, 8.5% of men and 9.5% of women began between uh starting at age 70 to maximize benefits. Now, recent data shows that less than 10% of newly awarded retired workers delayed Social Security until age 70. So the trend here, which is interesting, is the age that people are collecting is getting delayed more and more. And even with COVID, so the most popular claiming age at roughly 28% for both sexes, for time and age, between 66 and 67, which is followed by age 62, about 23 to 25%, with only about 8 to 9% waiting until age 70 to maximize benefits. Now, I've said in many other videos when it comes to Social Security, here's how you should consider collecting. And I've given many examples. Hey, if you have a million dollars and you paid into Social Security for 35 highest years, and you're probably gonna live till 85 or 90 because you're healthy. This is what the math says for your situation. But what that does not take into consideration, which you should do the analysis on using the tool that I constantly talk about, which is in my description below, is what if there's a significant age gap? What if it turns out there's rental income or a pension or inheritance or you're gonna work longer or your spouse is gonna do part-time income? All of those little factors drastically change how you should collect Social Security. So hopefully these stats were interesting. I'm curious what you found most fascinating. Let me know. And as always, appreciate you guys tuning in. If you want help in a custom financial plan, you can go to our website, rootfinancial.com. In the upper right, a little button that says see if you're a fit. Click on that, answer a few questions, and we might be talking very soon. Thanks, guys. Thank you all, as always, for listening to the early retirement podcast. I love getting to host these shows and make different content for you guys every single week. I've not missed a single week in years, and that is because I love getting to do this. Now, please be smart about this before you actually execute any strategy that you see me talk about or hear me talk about, should I say, please talk to your financial advisor, your tax preparer, your estate attorney. Please be smart about this. None of this should be construed as financial advice. This is for fun, educational, informational purposes only. Once again, just quick disclaimer here, guys. Please be smart about this. Appreciate you listening as always. And you can, of course, submit a question on my website, early retirementpodcast.com. If you, of course, want me to address a specific case study or topic. I will not promise I can get to it, but I respond to every single person. And if I find it will be helpful for a lot of people, I will absolutely make an episode on it. At the very least, give you some insight. That's it. Thanks, guys.