Real Question from a Federal Employee
Question from many federal employees:
“I’m getting close to retirement and keep going back and forth on Social Security. Should I claim at 62 and invest the money, or wait until full retirement age or 70 for a larger monthly benefit? And how could that decision affect my spouse?”
Social Security Claiming Age: 62 vs. 70
Age 62?
Full retirement age?
Wait until 70?
It is tempting to open a spreadsheet, calculate the break-even age, and let the numbers make the decision.
But Social Security claiming age may involve more than finding the point where one option mathematically catches another.
For FERS employees in particular, Social Security is one piece of a larger retirement income system that may also include the FERS Basic Benefit and the Thrift Savings Plan.
What Happens If You Claim Social Security at 62?
Social Security retirement benefits can generally begin as early as age 62.
The tradeoff is that claiming before full retirement age reduces your monthly retirement benefit.
For someone with a full retirement age of 67, claiming at age 62 can reduce the retirement benefit by as much as 30% compared with claiming at full retirement age.
And remember: full retirement age is not 67 for everyone.
It depends on your birth year. For people born in 1960 or later, full retirement age is 67.
That makes one of the first steps in this decision very simple:
Know your actual full retirement age before comparing your options.
What Happens If You Wait Until 70?
Once you reach full retirement age, Social Security provides delayed retirement credits for eligible months you postpone receiving your retirement benefit, up to age 70.
For people born in 1943 or later, those credits equal 8% per year.
For someone born in 1960 or later with a full retirement age of 67, waiting until age 70 results in a scheduled retirement benefit equal to 124% of the full-retirement-age benefit. There is no additional delayed-retirement-credit increase for waiting beyond age 70.
But, it is important to describe that 8% correctly.
It is not the same thing as earning an 8% investment return.
Delayed retirement credits increase your monthly Social Security benefit under the program’s rules. Investments, on the other hand, involve market risk and may produce gains or losses.
That distinction becomes important when someone says:
“Why don’t I claim Social Security early, invest every check, and come out ahead?”
What If You Claim Early and Invest the Money?
Mathematically, it is certainly possible to build scenarios where claiming earlier and investing the payments produces a larger account balance.
But that outcome depends on assumptions.
What return will the investment earn?
What happens if the market falls shortly after retirement?
How much investment risk are you willing to take?
Will you actually invest every Social Security payment?
And how long will you live?
An investment portfolio and a larger Social Security benefit solve different retirement planning problems.
That is why comparing the two solely by expected investment return may leave out important parts of the decision.
Break-Even Analysis Is Useful, But It Is Not the Entire Decision
A break-even analysis compares the cumulative benefits received under different claiming ages.
That can be useful.
For example, someone may calculate how old they would need to live before waiting until 70 produces more cumulative Social Security income than starting earlier.
But retirement does not happen inside a spreadsheet.
A more complete Social Security discussion may also include:
- Your expected longevity
- Your spouse’s situation
- Your FERS pension
- Your TSP and other investments
- Your retirement spending needs
- Your willingness to take investment risk
- Whether you need Social Security immediately
- Your tax situation
- The income that could remain available to a surviving spouse
Longevity deserves particular attention.
The Social Security Administration’s 2023 period life table, used in the 2026 Trustees Report, estimates that a 70-year-old male has an average remaining life expectancy of about 14.66 years, while a 70-year-old female has about 16.76 years remaining. These are broad population averages, not predictions for any individual.
Married? Pay Attention to Survivor Benefits
This is an area where terminology matters.
Your claiming age does not automatically reduce your spouse’s ordinary spousal benefit simply because you claimed early.
A spouse’s benefit can generally be as much as 50% of the worker’s primary insurance amount at the spouse’s full retirement age. The spouse’s own age when claiming can reduce the amount.
Survivor benefits are different.
If the higher-earning spouse dies first, that person’s Social Security claiming decision can affect the benefit potentially available to the surviving spouse.
Social Security rules generally allow delayed retirement credits earned by the deceased worker to carry through to the survivor benefit. Conversely, early retirement by the deceased worker can limit the widow(er)’s benefit.
For married couples, this means the Social Security decision may not simply be:
“How much money can I receive?”
It may also be:
“What income could my spouse have if I die first?”
That is a very different planning conversation.
Federal Employees Have Another Layer to Consider
FERS is built around three primary components: the Basic Benefit Plan, Social Security, and the Thrift Savings Plan.
Because those income sources work together, the Social Security decision should generally not be evaluated in isolation.
For example, one federal retiree may need Social Security at 62 to support retirement spending.
Another may be able to use other resources for several years and allow Social Security to grow.
Neither scenario automatically determines the right answer.
The question is how each income source fits into the broader retirement plan.
The Bottom Line
The Social Security decision is not just about finding the perfect break-even age.
The math matters.
But so do longevity, investment risk, family, survivor income, cash flow, and the rest of your federal retirement benefits.
Instead of asking only:
“At what age do I break even?”
Consider asking:
“How does each Social Security claiming strategy affect my retirement income and my family over the rest of our lives?”
That may lead to a much more useful retirement planning conversation.
ABOUT THE AUTHOR
Micah Shilanski, CFP®, is a distinguished financial planner known for his deep commitment to providing exceptional advisory services to his clients. As the founder of Plan Your Federal Retirement, Micah has dedicated his career to helping federal employees understand and optimize their benefits to help ensure a secure and prosperous retirement. His experience is widely recognized in the industry, making him a sought-after speaker and educator on financial planning and retirement strategies.
Micah’s approach is client-centered, focusing on creating personalized strategies that address each individual’s unique needs. His work emphasizes the importance of comprehensive planning, incorporating aspects of tax strategy, investment management, and risk assessment to guide clients toward achieving their financial goals.Floyd Shilanski (00:00)
Hi, and welcome to the Plan Your Federal Retirement Podcast. I’m Floyd Shilanski, managing partner and wealth advisor here. It’s not just about math when it comes to claiming Social Security Would you believe that? Hang on just a second. Let’s talk about it. No, I’m not a PhD. I’m not one of those guys got 47,000 acronyms behind their name. What I do have is a lot of gray hair and a lot of time helping help them make decisions. So let’s talk about something.
When it comes to claiming Social Security, let’s refresh our memories now. That the first time you can claim under current wall is age sixty-two. All right. At age sixty-two, you take a permanent reduction, however. All right. Full retirement age for the for all of you that are testing is age sixty-seven. Okay. At sixty-seven, you get all the benefits that you’ve accumulated over your work life. Now, if you delay that until age seventy, you get the maximum paycheck.
What I always try to get people to realize in the investment world, in the savings world, in the bond market, and CD markets, there’s no guarantee on interest rates. However, if you delay Social Security from A sixty seven to seventy, the government will give you an increase of eight percent plus cost of living allowance. Now the pushback I get a lot is wait a minute, Floyd.
If I start at 62 and take the money and invest it, I’ll have more money. As long as the market continues up to the right, I can’t argue without it. But again, there’s no guarantees. Number two, what if I take my money on 67 and invest it? Okay, as long as the market’s going up, you’re gonna outperform that extra 8%. However, what happens if the market corrects? What happens if now that money you have invested in the equities shrinks?
That also will affect. Now, many of my engineers and architects, they come in with their spreadsheets, saying well Floyd, Here’s the variances, here’s the delta. And if I delay till 70, it’ll take me to 85. If I start at 67, I’ll break even at this point in time. Again, I’m not going to argue the math. But now we have a couple of things we have to get into. One, we have the physiological, all right. We have the mental side, and then we have the reality side. Now, if you’ve ever taken a class.
Where Mike and I have been the instructors, hopefully you’ve walked away from that class thinking these guys really care about family. That’s a hundred percent accurate. We’re family or heat. Now, for those of you married, here’s what happens when you claim at age sixty two. You reduce the future benefit of your spouse. Even if they delay it, you reduce the future benefit. Now, statistically, guys, we’re gonna die before our loved ones. All right. Our life expectancy is
probably about fourteen point one years after we turn age seventy. Ladies, yours typically is sixteen years after that. But are we living longer today? Now stop I think about that. the story I always tell is when my grandmother passed away at sixty five and she had led a long hard life growing up living up in West Texas. Now, when you hear someone dying at age fifty five today, what do you think in your mind? That’s awful young.
And in fact, I’ve got numerous clients who are well over 80 today, and unfortunately no centurions, but I’m gonna beat that. My mindset is well, I I’ve been told my granddaughter I have to stick around, at least basically my great granddaughter gets married, and she’s only seven years old, so I’m hoping that’s another twenty years down the road. But the reality is we’ll be here longer. We have better medicine, better lifestyles, and replacement parts, whether it’s hips, whether it’s knees, whether it’s pose. Modern medicine is extending their lies, and that’s a good thing. Okay. So we have to think about, or you should be thinking about not only the man, but then longevity and the family. If you’re single, never married, never gonna get married, yeah, you only heard yourself and you started 62. However, if you do have a spouse that you look with and you care about that spouse, I think it’s kind of important to think about if you make these selfish adjustments to take the money you’re
you may be hurting them in the long term. My name is Floyd. and by the way, we do have a pa an in-person seminar coming up during the month of October up here in Alaska. So if you’d like to log on and come up and visit us and spend eight hours with us about federal benefits, love to see you there. If you don’t have the time to do that or not inclined to Alaska in October where it may be snow, you may want to just log on, request a interview with one of our advisors, and we can have a walk through this. All right.
So for the DIY’r it’s okay to start checking Social Security at 62. However, you gotta remember, you may be harming your spouse. All right. And when you think about Social Security, it just isn’t math. We have to think about several other things in it. I’m Floyd. Until next time, happy planning.
The content in Planner Federal Retirement is for general informational purposes only and should not be considered individualized advice. Investing involves risk, including possible loss of principal, and past performance does not guarantee future results. Guests are not affiliated with CWM LLC Investment Advisory Services offered through CWM LLC, an SEC Registered Investment Advisor. Planner Federal Retirement is not affiliated with the federal government.
