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Freedom for Retirement™ is the podcast designed to help you move beyond the fear of the complexity of finances so you can be financially free to achieve personal significance. Tune in with Josh Duncan each week to turn fear into fuel that drives you into Freedom & Significance.
Welcome to the Freedom for Retirement Podcast.
If you're a high-earning professional, business owner, or someone approaching retirement
and wondering whether you are truly on track, you are in the right place.
This podcast is all about helping you make smart, confident financial decisions without
the fear, confusion, or sales pressure that so often comes with money advice.
Each episode is designed to break down complex topics like retirement planning, investing,
taxes, and cash flow in plain English.
So you can understand what really matters and avoid the most common and costly financial
mistakes.
Everything you hear here is educational, fiduciary focused, and grounded in real-world
planning experience working with clients just like you.
I'm your host, Josh Duncan, partner at F5 Financial Planning.
Let's get started.
Somewhere around age 62, many people do the same thing.
You pull up a calculator or you find a spreadsheet online and you run the break-even math.
On Social Security.
Claim early and take a smaller check for longer, or wait and take a bigger check for less
time.
The calculator hands you a number somewhere around age 80, and then you sit there trying
to decide whether you'll live that long.
That calculation rests on the one thing you cannot know, and it leaves out the thing you
actually decide.
I'm Josh Duncan, partner at F5 Financial Planning, where we take a fiduciary approach to
maximizing our clients' wealth.
In this video, I'll cover what your claiming age does to your monthly check, why the
break-even age is the wrong place to make the decision, the question that replaces it, why
a married couple is making a different decision than a single person, and how locked in
you really are once you filed.
Let's start with the mechanics, because the rest of this only makes sense once they're
clear.
You can claim Social Security as early as age 62.
You can wait as late as age 70, somewhere in between.
Sit your full retirement age.
This is not a choice between three ages.
You can start in any month inside that window, and every month you wait changes the
number.
The three ages just happen to be the ones worth measuring from.
If you were born in 1960 or later, your full retirement age is 67.
Born in 1959, it's 66 in 10 months.
It slides back from there down to 66 for anyone born between
1943 and 1954.
Claim before your full retirement age and your benefit is permanently reduced.
With a full retirement age of 67, claiming at 62 cuts the monthly paycheck by 30%.
Wait past your full retirement age and you earn delayed retirement credits.
Two-thirds of 1% for every month you wait, which works out to 8% a year.
Wait all the way to 70 and you collect 124% of your full amount.
Put those two in side by side, and the check at 70 is about 77% larger than the same
person's check at 62.
Now, one detail many people get wrong is the increase stops at 70.
There is no credit for waiting until 71.
If you're past 70 and you haven't filed, file.
The cost of living adjustment applies either way for
2026, it's 2.8%.
That adjustment is a percentage, so it compounds on whichever base you chose, which widens
the gap between the two paths every year you live.
Those numbers are the only part of this the government decides for you.
Everything after this is yours.
So why is the break-even age the wrong question?
Let's do the math first because it isn't wrong, it's incomplete.
Take someone with a full retirement age of 67.
By claiming at 62, they collect eight years of smaller checks before the person who waited
until 70 sees a dollar.
Add up that head start divided by the monthly difference between the two checks, and the
two paths cross a few months past age 80.
Compare 67 against 70 instead, and they cross around 82 and a half.
Both of those figures ignore inflation adjustments and any returns on the money, so treat
them as rough arithmetic, not a forecast.
Here is what that arithmetic can tell you.
It asks you to predict your own date of death.
Nobody has that number.
Family and health history give you an idea, but you still have to make your best guess.
It treats the early checks as though they sit in a drawer.
In real life, they get spent or they get invested, and those two outcomes are nothing
alike.
And it says nothing about where your money comes from during the years you're waiting.
Take two people with identical earnings records, identical benefits, and identical
lifespans.
Both wait until 70.
One funds those years by selling stock during a bad stretch in the market.
The other funds them out of cash and a taxable account set aside years earlier for exactly
this purpose.
The breakeven calculator says those two made the same decision, but they didn't.
So
Which account are you not drawing from while you wait?
Well, let's put a number on the trade.
Say your benefit at a full retirement age of 67 would be $3,000 a month.
Waiting until 70 raises it to $3,720.
That's $720 more every month, $8,640 more a year for the rest of your life, adjusted for
inflation.
To get there, you have to replace three years of Social Security out of your own money.
At $3,000 a month, that's roughly $108,000 coming out of the portfolio that wouldn't have
come out otherwise.
Divide that bridge by the raise it buys and it pays itself back in about 12 and a half
years of collecting the larger check.
That much is arithmetic.
Here is what the calculators leave out.
Those waiting years are usually the lowest income years of your retirement.
You've stopped working.
Social Security hasn't started.
Required minimum distributions haven't started.
Your taxable income may never be this low again.
That's the window for Roth conversions.
I've covered the mechanics in a separate video on whether conversions are a smart tax move
or an expensive mistake.
So I won't reteach it here.
What matters is that the same years you spend bridging to a larger check are the years you
can move money out of a pre-tax account at a lower tax rate.
So waiting doesn't only buy a bigger benefit, it buys tax planning room you don't get
back.
There are two ceilings on that room, and both are worth knowing.
The first is Medicare, because we love our acronyms.
We call it IRMA, an income-related surcharge on your Medicare premiums, set by your tax
return from two years earlier.
For 2026, a married couple filing jointly starts paying in above $218,000 of income.
Convert past that line, and part of the raise you bought comes back out.
As higher Medicare premium.
Now the second ceiling came out of the One Big Beautiful Bill Act, the 2025 Tax Law, and
it sits lower than the first.
From 2025 through 2028, anyone 65 or older can claim an additional $6,000 deduction or
$12,000 for a couple where both spouses qualify.
It phases out above $75,000 of modified adjusted gross income for a single person and
above
$150,000 for joint filers.
Put those two ceilings next to each other.
For a couple, the deduction starts phasing out at $150,000, while the Irma surcharge waits
until $218,000.
So the constraint that binds first for a lot of households is not the one everybody talks
about.
That deduction is also the reason you may have heard that Social Security is no longer
taxed.
It still is.
What changed is that a deduction was added for people 65 or older.
And for some households, it's large enough to erase the tax of the benefit.
That is a different thing than the benefit being exempt.
And under current law, it ends after 2028.
Now the other direction, because waiting isn't automatically right.
If bridging the gap means selling stock into a decline you can't afford to wait out, or
draining the cash and taxable accounts you were counting on for flexibility, or if you
have
little pre-tax money worth converting in the first place, the case for waiting gets much
weaker.
One mistake worth naming: people claim early so the money can keep growing in the market.
That inverts the trade.
You're accepting a permanent reduction in a guaranteed inflation-adjusted income stream in
order to avoid a temporary withdrawal from a portfolio you were going to spend anyway.
When you claim is really a decision about the order you spend your accounts in.
I have a separate video on that sequencing question.
So, what about the person who outlives you?
If you're married, there's a second person inside this decision, and the break-even
calculation has no way to account for them.
Here's a rule: a surviving spouse can receive up to 100% of what the deceased spouse was
receiving once the survivor reaches their own full retirement age for full survivor
benefits.
Claim survivor benefits at the earliest age of eligibility and it starts closer to 71.5%.
The two checks never combine.
The survivor keeps the larger one and the smaller one goes away.
I've talked about that shift before in a video on what happens to your money when the
first spouse dies, along with the fact that the survivor will eventually file as a single
taxpayer.
What that video didn't do is follow the thread back to this decision.
So if you were the higher earner in your household,
Your claiming age doesn't only set your income, it sets the floor under your spouse's
income for every year they outlive you.
That benefit may end up being paid across two lifetimes, which means a break-even
calculation run against one life expectancy is using the wrong denominator.
For a married couple, what matters is how long at least one of you is alive, and that is a
longer horizon than either of you has individually.
Two households can handle this differently.
In the first, both spouses claim at 62.
Because they each ran their own numbers and each came out ahead.
In the second, the lower earner claims early, and that income is part of what funds the
higher earner's weight to 70.
The lower earner's decision carries far less weight either way, because that smaller
benefit likely disappears at the first death.
That's what makes it the flexible piece of the plan.
The mistake here is treating this as two independent decisions made in two separate
conversations by two people who share every other financial decision they make.
So
How locked in are you once you file?
Less than many people assume, though the exits are narrow and each one carries a cost.
Let's start with the case where you claim early and keep working.
Before you reach full retirement age, Social Security withholds $1 of benefits for every
$2 you earn above the annual limit.
For 2026, that limit is $24,480.
In the year you reach a full retirement age, the limit jumps to $65,160, and the
withholding eases to $1 for every three.
Earnings in and after the month you reach full retirement age don't count toward it at
all.
Those withheld benefits are not forfeited.
When you reach full retirement age, Social Security recalculates your benefit upward for
the months that were withheld.
So working while you collect early is closer to deferral than a penalty.
Then there are the two real do-overs.
The first is withdrawing your application.
Within 12 months of your benefit being approved, you can cancel the application and
reapply later as though you had never filed.
The cost is steep, though.
You repay everything you received, including anything paid to family members on your
record, and including the money that was withheld for Medicare premiums and for taxes.
And you only get to do it.
Once.
The second option opens at full retirement age.
Once you reach it, you can ask Social Securities to suspend your payments with nothing to
repay.
Every suspended month earns delayed retirement credits, the same two-thirds of 1%, and
payments restart automatically at 70.
Two things to know before spending.
Anyone else collecting on your record loses their benefit for those months, aside from a
divorced spouse, and Medicare will bill you for part two.
B directly since there's no benefit payment left to deductive from.
The difference between those two options is important.
And withdrawing the application erases the early claiming reduction because you reapply
from scratch.
Suspending doesn't erase it, it adds delayed credits on top of the reduced benefit you
already locked in.
If you take five things away from this, take these.
Know what your claiming age does to the check with a full retirement age of 67, starting
at 62, cuts it by 30%.
Waiting until 70 takes it to 124% of your full amount and the increase stops there.
Don't let a break-even date make the decision for you.
It's arithmetic resting on a number you don't have.
Ask which account funds the wait instead and what tax planning room those low-income years
buy you before Social Security and RMDs fill them up.
If you're married, decide to hire earner's age as a household because that check may be
supporting someone for years after you're gone.
And if you've already filed and the timing no longer fits, look at the 12-month withdrawal
window or a voluntary suspension at full retirement age before you assume the decision is
closed.
None of this is a recommendation to claim at any particular age.
Your earnings record, your health, your tax picture, and what your spouse would need all
belong in that decision.
Working through the whole plan rather than one calculator is what a fiduciary planner does
with you.
If you found this episode helpful, please consider subscribing to the podcast and leaving
a review.
It helps more people find the show and continue learning how to make smarter financial
decisions.
I'm Josh Duncan, partnered F5 Financial Planning.
If you would like to learn more about how we help our clients achieve financial freedom
for personal significance, please visit our website at www.f5fp.com.
Thanks for listening, and I'll see you in the next episode.