Investing Basics for Beginners: Is Waiting for Social Security Worth It?

Deciding when to claim Social Security depends on three factors: your current health and life expectancy, your need for immediate cash flow, and the financial security of your surviving spouse. While filing at age 62 provides an immediate “head start” on payments, waiting until age 70 can increase your monthly benefit by roughly 8% for every year you delay.

• Break-even Point: Most retirees must live past age 81 to make waiting until age 70 mathematically superior.
• Survivor Benefits: Delaying the higher earner’s benefit provides a larger lifetime safety net for a surviving spouse.
• Inflation Protection: Social Security is one of the only income streams that includes a guaranteed Cost-of-Living Adjustment (COLA).
• The Insurance Factor: Many financial experts view Social Security not as an investment to “win,” but as insurance against outliving your savings.

If you have ever looked at your projected Social Security statement and felt a wave of confusion, you are not alone. The choice between a smaller check today and a larger check eight years from now is one of the most stressful investing basics questions an American will ever face. It is a decision that pits your current needs against the statistical likelihood of your future longevity.

Our research shows that many Americans struggle to see the “why” behind the advice to wait. On the surface, taking $1,000 a month at age 62 seems like a no-brainer compared to waiting until 70 for $1,700. After all, by the time the person who waited receives their first check, the early filer has already collected $96,000. However, the logic shifts when we look at the mechanics of “longevity risk”—the very real danger of living longer than your money lasts.

Investing Basics for Beginners: The Opportunity Cost of Filing Early

When you start looking into retirement, you are essentially learning a specialized form of investing basics for beginners. In this context, Social Security is a unique asset. Unlike a traditional brokerage account where your balance can fluctuate with the stock market, Social Security is a “defined benefit.” The amount you get is determined by your highest 35 years of earnings and, crucially, the age at which you turn the faucet on.

Let’s imagine two people: Person A and Person B. Person A takes their benefit at 62, receiving $1,000 a month. Person B waits until 70, receiving $1,700.

For the first eight years, Person A is clearly “ahead.” They have cash in hand that they can spend or invest. If Person A takes that $1,000 and puts it into a compounding account at a 5% return, they are building a “head start” that Person B has to overcome. Our research indicates that Person B, with their larger check, won’t actually catch up to Person A’s total lifetime collection until they are both roughly 81 years old.

This is the “break-even point.” If you believe you will not live past 80, filing early looks mathematically attractive. But if you live to 90 or 95—as many modern Americans now do thanks to medical advancements—the person who waited until 70 will end up with hundreds of thousands of dollars more in total lifetime benefits.

Investing Basics: Stocks vs. Guaranteed Government Income

A common argument for filing at 62 is the idea that you can “beat the system” by investing your Social Security checks in the market. While understanding investing basics stocks is vital for any retirement plan, using Social Security as seed money for a brokerage account carries a hidden risk.

When you delay Social Security, you are effectively getting a guaranteed 8% return for every year you wait past your Full Retirement Age (FRA). There is no “investing basics book” or stock market strategy that can offer a guaranteed, government-backed, inflation-adjusted 8% return with zero market risk.

Furthermore, research from Kiplinger notes that the Social Security cost-of-living adjustment (COLA) for 2025 is 2.5%, followed by an estimated 2.8% in 2026. These adjustments are applied to your benefit amount. A 2.8% increase on a $1,700 check is worth more in actual dollars than a 2.8% increase on a $1,000 check. By waiting, you are not just increasing your base pay; you are increasing the “leverage” that inflation adjustments have on your future purchasing power.

The “Insurance” Mindset: Protecting Your Surviving Spouse

Perhaps the most overlooked factor in this decision is not your own life, but the life of your spouse. For married couples, Social Security serves as a critical survivor benefit. When one spouse passes away, the survivor is entitled to the higher of the two individual Social Security checks.

Many Americans find themselves in a situation where one spouse earned significantly more than the other over their career. If the high earner files at 62, they effectively “lock in” a lower survivor benefit for their spouse for the rest of that spouse’s life.

Consider a scenario where the husband was the primary earner and the wife is five years younger. If the husband waits until 70 to claim a maximum benefit, and then passes away at 85, his widow will receive that elevated check for the rest of her life. Given that women statistically live longer than men, this “insurance” policy can be the difference between a comfortable old age and financial struggle in a spouse’s final decades.

Understanding the 2025 and 2026 COLA Mechanics

Data from the Social Security Administration, as highlighted by Kiplinger research, shows that the average retiree check will increase from $1,927 to $1,976 in 2025. While this $49 increase helps, it is often offset by rising costs elsewhere. For example, in 2026, the projected 2.8% COLA increase will be partially consumed by rising Medicare Part B premiums, which are expected to jump from $185 to $202.90.

This “COLA catch-22” is why the size of your initial benefit matters so much. If your check is small because you filed at 62, the annual inflation adjustments may not even cover the rising cost of your healthcare premiums. By waiting until 70, your “floor” is much higher, ensuring that even after Medicare deductions, you have more usable cash in your pocket.

Additionally, the Social Security Fairness Act (SSFA) changes arriving in April 2025 will provide retroactive payments to some public sector employees who were previously impacted by pension offsets. This reinforces the idea that the system is constantly shifting; staying informed on these legislative changes is as important as knowing the basics of a 401(k).

What This Means For You

The decision to wait for Social Security is not an “investment” where you try to get the most money out of the government before you die. Instead, think of it as a hedge against the risk of living too long. If you are in poor health or have a pressing need for cash to avoid high-interest debt, filing at 62 is a valid and practical choice. However, if you are healthy, have other retirement assets to live on, or want to protect a surviving spouse, waiting until 70 provides a level of guaranteed, inflation-protected income that no stock market investment can replicate.

This article is for informational purposes only and does not constitute financial advice. Please consult a qualified financial advisor before making decisions about Social Security filing or retirement investments.