Personal finance authority Suze Orman is sounding the alarm on a widespread retirement mistake that could cost American workers hundreds of thousands of dollars over their lifetimes. At the heart of her concern is the timing of Social Security claims, a decision that many households approach with short-term logic rather than long-term strategic planning. Orman argues that the tendency to take benefits as soon as they become available is creating a silent crisis for the nation’s future retirees.
The math behind Social Security is straightforward yet frequently ignored. For every year an individual waits to claim benefits beyond their full retirement age, their monthly payout increases by approximately 8 percent. This guaranteed growth continues until the age of 70, representing a return on investment that is virtually impossible to find in the private market with the same level of security. Conversely, claiming at the earliest possible age of 62 results in a permanent reduction of nearly 30 percent compared to the full retirement amount.
Orman emphasizes that for the average American, Social Security is not just a supplement but a foundational pillar of their financial survival. By locking in a lower monthly rate early in life, retirees are effectively betting against their own longevity. With medical advancements and lifestyle changes leading to longer lifespans, many people find that their biggest financial risk is outliving their savings. A smaller Social Security check makes that risk significantly more acute during the final decades of life when healthcare costs typically peak.
One of the primary drivers behind early claiming is a general sense of fear and mistrust regarding the program’s future. Many workers believe they should take whatever they can get now before the system potentially runs out of money. Orman pushes back against this scarcity mindset, noting that while the Social Security trust funds face long-term challenges, the program is unlikely to disappear entirely. Deciding based on panic rather than actuarial reality often leads to a lower quality of life in one’s 80s and 90s.
Another factor is the psychological desire to stop working as soon as possible. Orman suggests that instead of viewing Social Security as the ticket to early retirement, workers should look at other ways to bridge the gap. This might include working part-time, downsizing a home, or tapping into other savings first to allow the Social Security benefit to mature. The difference between a check claimed at 62 and one claimed at 70 can be the difference between struggling to pay for basic necessities and living comfortably.
For married couples, the strategy becomes even more critical. The timing of the higher earner’s claim determines the survivor benefit for the spouse who lives longer. If the primary breadwinner claims early and passes away first, they leave their widowed spouse with a permanently reduced income stream. Orman argues that delaying the claim is an act of life insurance for the surviving partner, ensuring they are not left in poverty late in life.
Ultimately, the fix requires a shift in how society views retirement. Orman calls for more rigorous financial education to help people understand that the ‘break-even’ point—the age at which the total value of delayed benefits surpasses the total value of early benefits—is often younger than people realize. For those in reasonably good health, the odds are overwhelmingly in favor of waiting.
While personal circumstances like terminal illness or extreme financial hardship may necessitate an early claim, Orman believes these should be the exceptions rather than the rule. By reframing Social Security as a longevity insurance policy rather than a simple savings account, Americans can better protect their financial dignity in their golden years.
