New York: As millions of Americans approach retirement, one of the most common strategies heard is: “I’ll claim Social Security at 62 and just invest the money.” But financial expert Lane Martinsson, founder of Martinsson Wealth Management, warns that this popular move may not be as smart as it seems — especially in 2025.
In his latest breakdown on the Financial Fast Lane YouTube channel, Martinsson outlines how the Social Security system is structured, how benefits are calculated, and how the timing of your claim can significantly impact your lifetime income.
Claiming at 62 Means a 30% Cut
For those born in 1960 or later, full retirement age (FRA) is 67. If you start claiming at 62, you’ll face a 30% reduction in monthly benefits. And while the idea of investing early payouts might sound good, the Earnings Test can wipe out much of your early claims if you’re still working. In 2025, earnings over $23,400 result in a 50% withholding on the excess.
“You could end up losing over $96,000 in Social Security benefits between ages 62–66 if you work full-time,” Martinsson says.
Time Value of Money & Delayed Retirement Credits
By delaying Social Security until age 70, you could increase your benefit by a minimum of 77%, not including COLA (Cost-of-Living Adjustments). Historical data shows COLAs have averaged 3.57% since 1975. In one real scenario, someone deferring from 62 to 70 saw a 133% increase in benefit.
“Social Security isn’t a savings program—it’s an insurance program,” Martinsson explains. “Thinking of it like an investment leads to poor decisions.”
Spousal Benefits & Misunderstandings
Many retirees also misunderstand spousal benefits. If one spouse never worked, they may still receive up to 50% of the other spouse’s benefit. But if both worked, spousal benefits only apply if one’s PIA is less than half of the other’s.
What Most People Are Doing
While many assume most Americans claim early, only 32.5% claim at age 62. Another 26.5% claim between 63 and FRA, and only 8% wait until age 70—despite the large financial gains associated with waiting.
Financial Planning is Key
Martinsson emphasizes that there’s no one-size-fits-all answer. Your health, assets, income needs, and goals all play a role. For some, early claiming makes sense. For others, deferral maximizes lifetime value.