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

0:00Your 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 a dollar at 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.

0:41Before 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.

1:18Here are three quick reasons to pre-order 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.

2:03And 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.

2:42Two 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 it 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 going to make. When to take social security. Specifically, and I want to be upfront 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.

3:38And 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 162 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.

4:25We'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.

5:04A, what happens to your health care if you retire at 62? And B, what happens to your social security benefit fit 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.

5:46If 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.

6:28Social 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 % below your full benefit, depending on your birth year.

7:1867 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%. 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.

8:05If 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. Same person, same lifetime of contributions, just different starting dates. Now, here's the question everyone asks immediately. Which one is going to make me the most money? And the answer is, it depends entirely on how long you live, which is the part nobody knows, which is what makes this interesting and leaves us wondering if there actually is a right or wrong answer here. Now we'll get into what's called the break-even math. I'm going to keep this simple because the point isn't to dazzle you with arithmetic.

8:51It's to give you one number that actually matters. The break-even point is the age at which the strategy of waiting surpasses the strategy of taking early. Before the break-even point, taking early wins. After it, waiting wins. Let's look at taking at 62 versus 67. If you take at 62, let's say you collect that$1 ,400 a month starting immediately. If you wait until 67, you collect$2 ,000 a month, but you've given up five years of checks to get there. Five years of$1 ,400 monthly checks is$84 ,000 in your pocket before the person who waited collects a single dollar. The person who waited then collects$600 more per month, but to break even, they need to make up that$84 ,000 gap at$600 a month.

9:46That takes 140 months, about 11 and a half years. Add that to age 67, and you get your break-even point to be roughly between the ages of 78 and 79. Before 78 and 79, the person who took at 62 came out ahead. After 78-79, the person who waited wins, and wins by an increasing margin for every year they keep going. Now let's look at taking at 62 versus 70. Same exercise, taking at 62 versus waiting until 70, that's eight years of checks foregone, totaling roughly $134 ,000 gap. The monthly difference is about$1 ,080. That$134 ,000 gap at$1 ,080 a month takes about 124 months. That's a little over 10 years.

10:38Add that to age 70 and your break-even is roughly age 80 to 81. Now, here's the number the textbook puts in at this point. The average life expectancy for a relatively healthy 62-year-old American man is approximately 82. For a relatively healthy woman, approximately 85. So on pure expected value math, if you're perfectly average, weighting is the marginally better bet, particularly for women who statistically have more years on the other side of that breakeven point. And the textbook stops there and concludes, therefore you should wait until 70. Case closed, thanks for coming, Tyler's a ding dong.

11:22But here's what the textbook continues to leave out, which is almost everything to me that actually matters. The expected value calculation assumes that a dollar at 82 is worth the same to you as a dollar at 62. And I would like to submit, my friends, respectfully but firmly, that it is not, not even close. This episode is brought to you by Copilot Money. I have a group chat with four of my closest friends from my finance days. Between the five of us, we have decades of experience managing other people's money, multiple licenses, and I say this with love, a genuinely embarrassing amount of opinions about expense ratios.

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14:00This episode is brought to you by Element, which as someone who has recommended index funds for 15 years might still be the best value proposition I've ever encountered. I just got back from a three and a half mile hike through the Vermont woods with my bloodhound and I'm literally drinking a slim and salty 12-ounce can right now as I record this. That's how far gone I am. Element has a new 12-ounce sparkling line. Pineapple salt, lemonade salt, black cherry salt, orange salt, all delicious. Slim cans built for the in-between moments, not just post-workout. The dog walk, the long afternoon of content creation, the part of the day where you'd normally reach for something you'd regret.

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16:07And trust me on the mango chili and the watermelon salt. Bill Perkins wrote a book called Die With Zero. And the central argument is simple enough to fit on a napkin. The goal of financial planning should not be to die with the most money. It should be to deploy your money at the moments in your life when you can get the most relative value from it. And those moments are not uniformly distributed across your lifespan. As an example, he suggests you might choose to spend more on fast-paced physical adventures and activities and hobbies in your 30s and 40s, knowing that your body might slow down in your 50s and 60s.

16:50In similar fashion, there's a framework that I love from the retirement planning world. This is the three phases of retirement. We start out with the go-go years. This is early retirement. You're hopefully healthy, mobile, energetic. You're going to hike the thing, take the trip, play with the grandkids on the floor, eat the meal. Your capacity for experience is high. Next, we have the slow-go years, mid-retirement. Things start to slow down. You're still going to travel, but probably not the backpacking version. And the money you spend here still buys good experiences, but the menu is slightly shorter.

17:30Finally, we have the no-go years. This is late retirement. Your world gets smaller, medical expenses start to add up, and the money you spend here is largely on comfort and care. Important, but a different kind of spending than the go-go years. Here is Perkins' point, and it's a sharp one, is that most traditional financial planning optimizes for accumulation without thinking carefully about which phase the money is actually going to be spent in. You save and save and delay and optimize, and then you have this enormous pile of cash at 78, and your knees hurt, and your best friend died last year, and the trip to Patagonia that was always someday is no longer physically possible.

18:15And even if it were, you might just not want to go anymore. He calls this the die with zero principle. Don't leave value on the table. Don't save the good China for the company that never comes. Now let's apply this to social security. The$84 ,000 you leave on the table by waiting from 62 to 67, those aren't abstract dollars. Those are dollars available during your early to mid 60s, which for most people are go-go years, active years, the years when$1 ,400 a month buys you actual experiences, not just additional zeros in a brokerage account you'll never fully spend. So the question isn't just which strategy produces more lifetime income in a spreadsheet.

19:01The question is, when is this money worth the most to you? A dollar at 63 that funds a month in Portugal is worth more experientially, memorably, meaningfully than a dollar at 83 that funds a freaking copay. And I double dog dare you to disagree with me on that. I don't think anyone would argue with the logic. I get it. You still have to pay for things, but they're not as important philosophically. And that's the point. This isn't even math. It's philosophy. And I'd argue it's way, way more important than the math. Okay, we're going to stop here because we have just spent several minutes building a case for retiring at 62 and taking Social Security early, and I have not yet mentioned the single largest practical obstacle to doing that.

19:52Healthcare. Medicare, the federal health insurance program for retirees, does not start until age 65. Not 62, not 63, not 64 in 11 months, 65. Which means that if you retire at 62 and you're currently getting your health insurance through your employer, you have a three-year gap during which you are responsible for finding and funding your own health coverage. And I want to be very honest with you about what that gap can cost. Because I've watched people make the retire at 62 decision in complete ignorance of this number and then experience genuine financial shock when they actually price it out.

20:29Let's talk about your options, and I'll try to get as specific as possible. Option one, you could use COBRA. COBRA lets you continue your employer's health insurance plan after you leave your job, but you pay the full premium, including the portion your employer was previously covering. The average employer-sponsored family plan costs about$23 ,000 a year in total premiums. Your employer was probably paying 70 to 80 % of that. On COBRA, you pay all of it, plus about a 2 % administrative fee. That's potentially$1 ,800 to$2 ,000 a month just for health insurance for a family. COBRA also only lasts 18 months, so it doesn't even bridge the full three-year gap to Medicare.

21:16So we move to option two, ACA Marketplace Plans. The Affordable Care Act marketplace at healthcare.gov is where most early retirees end up, and it is genuinely more manageable than COBRA for many people. The key is that ACA subsidies are usually based on your income. If your income in retirement is relatively modest, which for many people it tends to be in the early years after we lose our typical income, you may qualify for significant subsidies that bring your premiums down substantially. The catch, if you have significant retirement account withdrawals, investment income, or Social Security income that pushes your modified adjusted gross income above roughly 400 % of the federal poverty level, those subsidies shrink or disappear.

22:05As these numbers change annually, you can verify the current numbers at healthcare.gov. The planning opportunity here, and it's real, the years between 62 and 65, before Medicare and potentially before large retirement account withdrawals can be a window of relatively lower income, which means relatively higher ACA subsidies. Some early retirees manage this window quite deliberately and end up paying very little for coverage, but it requires planning, not just hoping. And speaking of hoping brings us to option three, your spouse's employer's plan. If your spouse is still working and has employer-sponsored insurance, this is almost always the best option.

22:54Get on their plan. It's typically far cheaper than anything you'd find on the open market, and it bridges that gap cleanly. So figure out which one of you likes your job more and go from there. I'm only half kidding. Option four, find part-time work with health benefits. Some people in this gap period work part-time specifically for the benefits. Starbucks has been famous for offering health insurance to part-time employees. Costco, UPS, and some school districts. You're not working because you need the income, you're working because the insurance is worth more than the paycheck. This is a legitimate strategy, and more people should at least know about it, even if you don't exactly want to spend your early 60s making orange mocha frappuccinos or checking people's receipts before they leave Costco.

23:45Option five, HSA subsidies. If you have a high deductible health plan, you might be eligible for a health savings account. If you are, I cannot stress this enough. Open it, fund the account annually as soon as you can, max it out if you can. In 2026, you can put in$8 ,750 for a family,$4 ,400 if you're single, contributions are tax deductible, investments can grow tax-free, and withdrawals are tax-free so long as spent 100 % on medical expenses. This account is pure freaking gold, and I'm currently maxing out mine so I can make sure to cover this gap early and plan accordingly. The bottom line on healthcare, if you're seriously considering retiring at 62, you need to price out your health insurance situation before you make the social security decision.

24:38For some people, this is manageable cost that changes the math only slightly. For others, particularly those who are between ACA subsidy thresholds and too young for Medicare, this cost is substantial enough to materially affect whether early retirement is financially viable at all. Do not discover this number after you've already retired. Discover it today. So here's your rough planning estimate. Budget anywhere from$500 to$2 ,000 per month per person for health insurance during the gap years, depending on your income level and what coverage options are available to you. That's a wide range intentionally because the actual number varies enormously based on your situation, but definitely go get your actual quote before you make any decisions.

25:28This episode is brought to you by Anthropic. And I'll be transparent, this ad comes straight from the heart because Claude is genuinely my most used thinking partner, strategist, and the only collaborator who doesn't judge me for working at midnight, questioning every life choice that led me to voluntarily write about Roth conversions for fun. Claude is the AI for minds that don't stop at good enough. It's the collaborator that actually understands your entire workflow and thinks with you. Whether you're debugging code at midnight or strategizing your next business move, Claude extends your thinking to tackle the problems that matter.

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26:51And as someone with 4 million followers and a book publisher, I cannot overstate how much that matters. So if you're a creator, writer, or just someone ready to tackle bigger problems, get started with Claude today at claude.ai.tyler. That's claude.ai.tyler. And check out Claude Pro, which includes access to all of the features mentioned in today's episode. That's claude.ai slash tyler. Moving on to what happens if you take it early and keep working. This is the other section I promised, and it is one of the most misunderstood rules in the entire social security system. I get questions about this constantly, and the answer surprises almost everyone who hears it.

27:38Here's the question. Can you take social security at 62 and still work? The answer is absolutely. with a significant catch that disappears later. The Social Security Administration has something called the earnings test, and here's how it works. If you are under full retirement age, so under 67 for most people, and you collect Social Security while still working, your benefit is reduced if your earnings exceed a certain threshold. In 2026, that threshold is approximately$24 ,480 per year. And for every$2 you earn above that limit, Social Security withholds $1 of your benefit. So let's make that concrete.

28:25Say you're 63, collecting$1 ,400 a month in Social Security, and you're still working part-time earning$40 ,000 a year. That's$15 ,520 above the earnings limit. Social security withholds$1 for every$2 over, so they withhold$7 ,760 for the year. That's about$647 a month withheld from your$1 ,400 monthly check. You'd net about$753 a month from social security while working, which would obviously change your break-even math substantially. In the year you reach full retirement age, the rules get more lenient. The threshold now jumps to roughly$65 ,160 in 2026, and you only lose$1 for every$3 above that limit, just for the months before your birthday.

29:21And then, on the day you hit full retirement age, the earnings test disappears entirely. you can earn any amount and collect your full social security benefit simultaneously, zero penalty. Now, here's the part that everyone misses and that genuinely changes how you should think about this. The withheld benefits aren't gone. They do come back. When you reach full retirement age, the SSA recalculates your benefit to credit you for the months that were withheld. Your monthly benefit goes up permanently to reflect those withheld months. So the money wasn't confiscated, it was deferred. So if you had a year where$7 ,760 was withheld, roughly six months of your benefit, the SSA adds those months back and increases your monthly check at full retirement age accordingly.