With Social Security in Turmoil, Should Clients Claim Early?

The Question on Every Client’s Mind

In an email, a long-time client posed the question on everyone’s minds: Do you have a sense about whether it might be worth taking the loss of future funds to just hop into Social Security now before it gets even harder?

Well, that’s a loaded question. How should financial advisors answer it? How can they help clients feel better or more confident in these turbulent times? Simply telling them to stay the course is not convincing.

Run a Few Social Security Scenarios

Before answering the question, run a few Social Security claiming scenarios. You’ll want to confidently back your recommendations with numbers, both for Social Security and in overall retirement income plans.

Using your preferred Social Security calculator, software, spreadsheets or the tools on SSA.gov, run each client’s current claiming strategy against what your clients really want to know: Can I claim now and still be OK throughout retirement?

Let’s analyze the situation for a married couple with the following situation:

• Husband was 67 in February 2025, with a full retirement age of 66 and 8 months
• Wife will be 65 in June 2025, FRA = 67
• He’s planning to work until at least age 70; she’s retired
• His retirement ends at 92, hers at 95
• His PIA = $3,800, hers = $2,750

Their original plan was for him to wait until age 70 to claim. As the lower earner, she was going to claim at her FRA, in June 2027.

A Look at the Original Plan

With this strategy (all numbers rounded):

• Her annual benefit = $33,000/year
• His annual benefit = $58,000/year
• Total income from Social Security = $91,000/year
• The survivor benefit = $58,000/year
• The present value of this strategy over their lifetimes = $1.69M
  

This is not quite the optimal strategy for their longevity projections. If she also waited until age 70 to claim, her benefit increases to $44,000 a year, and total income reaches $99,000 a year. The present value increases slightly to $1.71 million.

Moving the Claim Up to 2025

If they choose to jump in early, overall present value drops to $1.61 million, a 6.3% decrease over 30 years. It’s not necessarily much of a reason to wait.

The key to Social Security claiming decisions, however, is cash flow. Here, there is a dramatic difference:

• His annual payment drops to $48,000
• Hers decreases to $28,000
• Overall household Social Security cash flow drops 23%, to $76,000/year 
  

If they decide to claim early, where will they make up the $23,000 shortfall? And how damaging will that be to their overall retirement income success?

The decision to stay the course or jump early is weighing heavily on clients’ minds. Help them sort out their options by connecting the dots between the asset value of Social Security on their household balance sheet and their retirement cash flow.

Just looking at the present value of this income source could lead clients to claim early. There’s not that much of a loss over a 30-year retirement.

But Social Security monthly income is typically used to cover essential expenses in retirement. If they reduce that cash flow 23%, what are the broader implications for retirement income? How will drawing down more from personal assets disrupt their discretionary plans or legacy plans?

Are clients willing to make such a dramatic tradeoff? Or do they put on a life jacket and try to manage through these turbulent waters?

Marcia Mantell is the founder and president of Mantell Retirement Consulting Inc., a retirement business and education company supporting the financial services industry, advisors and their clients.