Navigating Social Security requires moving beyond myths and misconceptions to develop a personalized plan for your financial future and peace of mind.
Featuring Insights from Andrew Kinder, Retirement Planner at Lantern Financial
When it comes to retirement planning, two words somehow cause more stress and confusion than almost anything else: Social Security.
For decades, pre-retirees have been handed a one-size-fits-all rule of thumb. The prevailing advice across break rooms and golf courses is almost always the same: “Delay Social Security until 70, because you earn 8% a year by waiting. It’s a guaranteed return backed by the U.S. government.”
While that sounds incredibly attractive on the surface, the reality of life expectancy, federal debt, and personal wealth tells a very different story. We spoke with Andrew Kinder, a retirement planning specialist at Lantern Financial, to break down why blindly waiting until 70 might actually be a critical misstep for many retirees.
The Danger of the “Guaranteed Return” Myth
The primary argument for delaying Social Security is the mathematical increase in your monthly benefit. But viewing this simply as an “8% return” is fundamentally flawed.
“Let me start by pushing back on something you’ve probably heard, because it drives me a little crazy,” says Kinder. “That 8% is not a real return. That is an increase in a future payment. And that future payment doesn’t actually pay off, meaning you don’t break even, until you’re in your early to mid-eighties.”
When looking at the data, the average life expectancy for both men and women in the United States falls short of that break-even point. Statistically, the majority of people who sacrifice years of payments to hold out for a “better deal” at 70 never actually live long enough to collect the funds required to justify the wait.
The Trust Factor and the 2030s Deadline
Beyond individual life expectancy, there is a macroeconomic reality that retirees must consider: the health of the system itself.
“There is a massive trust piece to this equation,” explains Kinder. “The federal government is carrying roughly $40 trillion in debt, and the Social Security trust fund is projected to face real pressure in the early 2030s. When someone tells me they don’t want to wait, that they’d rather have their money now while the system is fully funded, I think that’s a completely reasonable position. That holds true even for clients who are perfectly healthy and have strong family longevity suggesting they’ll outlive that break-even point. The reality is that predicting our exact lifespan, or what the government might do down the road, is nearly impossible. Because of those unknowns, I’m not going to argue with someone’s gut. At the end of the day, my goal is to do what gives them the most peace of mind, provided it doesn’t negatively impact the rest of their financial plan.”
For many, claiming early is a way to reclaim control over their hard-earned dollars rather than leaving their timeline at the mercy of future legislative changes.
Moving to a Personalized Framework
So, should everyone just take it early? According to Kinder, the answer is no. The decision of when to claim shouldn’t be based on a generalized rule, but rather a customized framework built around two specific factors: how much you have saved, and your spouse’s situation.
Scenario A: Modest Savings with a Strong Benefit
If you have a modest nest egg, for example, around $100,000 in assets, but you have earned a strong Social Security benefit while spouse has not, waiting to claim can actually be the smartest move.
“If you pass away first, your spouse inherits your Social Security benefit,” Kinder notes. “Locking in a higher amount at 70 could be the most important financial decision you make for them. In that scenario, the survivor benefit completely outweighs the risk of waiting.”
Scenario B: The Well-Funded Retiree
However, for those who have accumulated significant wealth and have goals of passing wealth to family or charity, the strategy completely changes.
“If you’ve saved well, say you have a million dollars in assets, the picture flips,” says Kinder. “Your spouse is going to be taken care of either way. In that scenario, taking Social Security earlier allows you to leave your investments untouched for longer, keeping more of your wealth growing in the market for your loved ones to eventually inherit. Conversely, if you delay Social Security, you are forced to live off your portfolio in the meantime. If you and your spouse were to pass away unexpectedly early, your heirs would be left with a significantly smaller bucket of money because you drained your own investment accounts instead of utilizing your Social Security benefits.”
The Takeaway
There is no magic age to claim Social Security that works for every American. It is a highly individualized decision that balances life expectancy, macroeconomic realities, and your personal balance sheet. By stepping away from the “8% illusion” and working with a professional to map out your specific assets and legacy goals, you can make a confident, data-driven decision about when to start your benefits.
To learn more about Andrew Kinder’s approach to retirement planning, visit Lantern Financial or connect with Andrew Kinder on LinkedIn, or follow Lantern Financial on Facebook, and Instagram.
Disclaimer: Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. This commentary reflects the personal opinions, viewpoints and analyses of the author, Andrew Kinder. It does not necessarily reflect the views of Foundations Investment Advisors, LLC (“Foundations”) and is provided for educational purposes only and the contents are solely maintained by and the responsibility of the applicable third party. The third-party content is subject to change at any time without notice, and does not represent an express or implied opinion or endorsement of any specific investment opportunity, investment strategy or planning strategy. Foundations in no way deems reliable any statistical data or information obtained from or prepared by third-party sources in this commentary, nor does Foundations guarantee its accuracy or completeness. No legal or tax advice is provided or intended.
