Here's the Social Security Advice You Really Want

Knowing yourself is a key part of being smart with your money.

Dan Caplinger
Dan Caplinger
Jun 23, 2019 at 8:08AM
Investment Planning

Social Security is a critical part of every American's financial life, and making smart choices about your benefits is one of the most important decisions you'll make with your money. That's why so many people seek out advice on the best way to handle Social Security, and why you'll find that Social Security is one of the most popular topics among those offering advice on financial planning.

Over the years, there's been a subtle but persistent shift in the way that you'll see Social Security topics get covered. Even though the underlying way that Social Security works hasn't seen any major changes over that time frame, the most common Social Security advice you'll see looks a lot different. Understanding the reason for that shift is important not just to make the best Social Security decision for your own personal situation but also to put all the financial guidance you receive into the right perspective.

Three Social Security cards with a brass key on top.

Image source: Getty Images.

The evolution of thought on Social Security

Back in the mid-2000s when I first started writing about Social Security for The Motley Fool, the predominant mindset among financial planners was that the longer you waited to claim retirement benefits, the better off you'd be. Commonly, those writing on the topic would point to the upsides for delaying your benefits:

  • Monthly payments can be 75% larger if you claim at 70 than if you claim at 62.
  • The fact that Social Security is guaranteed for life makes it valuable as longevity insurance, and waiting longer to claim is equivalent to spending money to get larger prospective payments in the future.
  • Your retirement benefit decision has an impact on survivor benefits for any family members eligible to receive them on your work history, and the longer you wait, the more those surviving family members can get as well.

Usually, you'd find a few counterarguments within those articles, coming up with situations in which you'd be better off claiming earlier. You'd also see acknowledgements that for many, waiting simply wasn't a financially viable option. However, the primary point that planners tried to make was that in general, waiting was the right move.

Yet by the mid-2010s, that mindset had changed. Suddenly, a host of planners made exactly the opposite argument: Claiming Social Security early was actually a smart move. New arguments emerged, including Social Security's own assertion that its payment structure is designed to be claim-date neutral from an actuarial standpoint. Some point to uncertainty about Social Security's future as a reason to grab as much as you can sooner rather than later, and you'll also find more emphasis on the possibility that you won't live to your full life expectancy as a reason not to wait.

A willing audience

It'd be natural to look to Social Security itself to explain the change. If there had been any major reform to the program, it might provide the rationale for the shift in sentiment. Yet there weren't any truly large amendments to Social Security's laws.

Instead, what changed was the way that financial planners reacted to their audience. Rather than trying to force late-claiming strategies down their clients' throats like a parent trying to get toddlers to eat their vegetables, planners acknowledged that most people wanted to take their benefits as early as they could. After often fruitless attempts to convince their clients otherwise, planners instead inverted their perspective.

From there, people's natural tendency toward confirmation bias created a feedback loop that heightened the extent of the shift. Readers responded much more favorably to advice telling them that they were smart to do what they were inclined to do anyway. Planners seeking larger audiences saw the favorable attention their peers were getting, and more jumped onto the bandwagon. Even now, you can still see differences in the viewership that people get when they suggest early claiming is the right move compared to those whose opinion is to wait.


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Don't just hear what you want to hear

Financial planning is a business, and like any other business, it depends on customers who are willing to pay attention to what planners suggest. As you're seeking financial advice for your own personal situation, it's important always to put whatever you read into the perspective of the planner who's providing it to you. Knowing that context will help you understand any incentives that could possibly have an influence on what you're reading -- and help protect you from simply accepting something you agree with as fact without further thought.

Social Security is a tough area to grasp in full, and one-size-fits-all advice is impossible. That doesn't make what financial planners say about Social Security worthless, but it does make it vital to be able to apply general knowledge well to your own specific situation.