Social Security: Best Way To Maximize Your Benefits According to David Bach
Written by
Vance Cariaga
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Daria Uhlig
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It’s fair to say that financial author David Bach is no fan of conventional wisdom when it comes to Social Security retirement benefits. While many financial experts recommend waiting as long as possible to claim benefits, Bach’s advice to early retirees is to claim them as soon as you become eligible.
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“I push [clients] to take Social Security early,” Bach said in a 2021 YouTube video. “They say, ‘But I don’t need the money.’ I know you don’t need the money — great. So travel first class, buy a new car, give the money to your grandchildren, take a cruise … Just go enjoy.”
What he’s basically saying is that you should file for Social Security at age 62, when you first become eligible. That runs contrary to the popular theory that you are almost always better off waiting as long as possible. For those born in 1943 or later, Social Security checks increase by 8% per year for every year of deferral after age 62, up until age 70.
According to a study released last year by researchers from the Federal Reserve, Boston University and Opendoor Technologies, waiting until you are 70 years old to file for Social Security could boost your finances by more than $182,000. The study also determined that workers ages 45 to 62 should wait beyond age 65 to collect their benefits — and more than 90% should hold off until age 70.
So why does Bach, who is one of GOBankingRates’ 100 Most Influential Money Experts, take the contrarian view?
One reason has to do with Social Security’s looming funding shortfall involving the program’s Old Age and Survivors Insurance Trust Fund, which is expected to run out of money in about a decade. When it does, Social Security will lose about 23% of its funding. Bach reasons that the shortfall could lead to benefit cuts, so you might as well get them sooner rather than later.
And although waiting for your benefits results in larger monthly payments, it could take years for that extra amount to catch up to what you would’ve received had you filed for benefits earlier. In fact, Bach’s guest in the YouTube video — Randy Mixon, a self-described “COVID retiree” who lost his job during the pandemic — calculated that if he’d delayed filing for Social Security for six years, it would have taken him another 12 years to break even.
“The government wants you to wait — which is a great sign that you should take it early,” Bach said in response.
The other side of that argument is that if you live another 10 to 15 years after breaking, even you will be stuck with a much smaller Social Security payment than you would have received by waiting. Even if it’s only $200 a month lower, that adds up to $24,000 over the course of a decade. But chances are, the difference will be a good deal more than that.
The average Social Security payment at age 62 is about $1,247 a month. At age 70, that rises to about $2,210 a month — a difference of $963. Once you get back to zero, you will have an additional $11,556 a year by waiting. For seniors in good health with long life expectancies, it pays to wait. But if you face serious health issues, then collecting early is probably the smarter option.
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