Social media users may love the “6-7” trend, but when it comes to their advice for baby boomers, a number of recent posts from TikTok financial influencers have users recommending that people start collecting their Social Security benefits early, at age “62.”
However, this differs from what financial planners typically recommend, which is that people delay their Social Security claim as long as possible to get the maximum monthly benefit at age 70.
Here’s what to know about the online debate.
How does age affect Social Security payments?
Before you do anything, it’s important to understand how Social Security works—and that you contact your financial advisor when making big decisions about your retirement.
That said, how it works is that at full retirement age (FRA), you can claim 100% of your Social Security benefits, which are calculated based on your lifetime earnings. Historically, that age was 65, but it has been gradually increasing to age 67, due to changes in Social Security’s financial structure that Congress enacted in 1983, according to the American Association of Retired Persons (AARP), a nonprofit, nonpartisan organization for Americans 50 and older.
So, if you begin benefits before your full retirement age, at say, 62, Social Security reduces your monthly payment by a fraction of a percent for each month you filed early. If you wait till age 70, you can receive your maximum monthly benefit, per the AARP.
What are people saying on TikTok?
Some financial influencers, or “finfluencers” on YouTube and TikTok have posted about the issue and recommended that people take the payout starting at 62, and invest that money monthly in the stock market—which is the opposite advice of most expert financial planners.
According to the arguments on TikTok, from users such as the Medicare Family, doing this makes sense for some people, namely if you are sick (“and may not live to be 70”); or even “if you are going to live a long time, because you can invest it” in the stock market, which currently has high returns, or with a financial advisor.
What do the experts say?
Many financial advisors feel differently.
“I generally do not recommend that people claim Social Security at 62 unless they seriously need the money or have a shortened life expectancy,” Social Security advisor Mary Beth Franklin tells Fast Company. “For people who are healthy enough and wealthy enough to wait up until age 70 to claim maximum benefits, there is a huge pay off—an extra 8% per year, delayed retirement credits for every year they postpone claiming beyond full retirement age (FRA) up to age 70—which can also maximize survivor benefits.”
Audrey Guo, assistant professor of economics at Santa Clara University’s Leavey School of Business, adds that beyond the typical life expectancy concerns, the decision to claim Social Security early comes down to a person’s appetite for risk, as it’s essentially a savings vehicle.
“While it’s true you may be able to earn a higher return by taking your monthly payment and investing it in the stock market, this only makes financial sense if you don’t have any other assets in relatively low-yield assets such as savings accounts or bonds,” Guo explains to Fast Company. “Otherwise, you would also want to liquidate and invest those assets into the stock market before claiming Social Security early.”
“Realistically though, most folks probably don’t have (and shouldn’t have) the ability to stomach that much risk,” Guo adds.
What should I make of all this?
Above all, it’s important to remember that listening to financial advice from strangers on the internet is very risky, and it’s best to consult with a trusted financial advisor about your specific situation before making any big decisions about your finances or retirement.