Orman’s argument hinges on a huge reduction in lifetime income potential. Claiming at 62 means you’re accepting a 30% reduction to your Social Security benefits. You only get to unlock 100% of your Social Security potential if you wait until full retirement age (67 for anyone born after 1960).
The argument Orman keeps hearing on social media is that it takes over a decade for the larger checks to outpace the earlier start. If you do the math, someone who waits to claim until 67 won’t “break even” on their total earnings until they hit age 79.
Although Orman admits the math is sound, that doesn’t necessarily translate to sound logic. As Orman puts it, “Waiting to collect a larger benefit is not a gamble — it is insurance against the very real possibility of living a long time.”
To illustrate her point, Orman says to imagine a 65-year-old woman in decent health who has a 50% chance of living till 88. According to Orman, the peace of mind that comes from having “meaningfully more” after the break-even age is far more valuable than collecting early.
But what if Social Security runs out of dough?
The second rebuttal Orman debunked centers around the fear that Social Security won’t have enough funds to pay beneficiaries.
By the Social Security Administration’s own admission, the trust fund that supports these paychecks will start running low soon. Without any action in D.C., current tax revenue will only bring in enough to pay out “three-fourths of the scheduled benefits” starting sometime between 2033 and 2035.
Understandably, that might spook a lot of people into taking their Social Security earlier to get their cash while they can.
But Orman says that’s not a good enough argument.
First of all, it’s still a big “if” that beneficiaries will take the brunt of this insolvency issue. Orman pointed to a similar crisis in the 1980s when Alan Greenspan introduced reforms to protect the most vulnerable Americans.
If beneficiaries do suffer a worst-case scenario cut to their monthly pay, you’ll only come out ahead for a few years before the cut happens. After that, you’re affected like everyone else — and will suffer an additional cut through your own actions for the rest of your life.
