Written by Stina Antonopoulos
Founder of Roots & Wealth | Retirement Income Planning | Author of What If?

Before You Buy More Retirement Income, Maximize the Income You Already Own

When people approach retirement, one of their first questions is often:

“When should I start Social Security?”

Many people claim as soon as they become eligible because they want the income, believe they should collect while they can, or think they can invest the payments and come out ahead.

That decision may be appropriate in some circumstances. However, claiming Social Security early can also permanently reduce one of the strongest sources of lifetime income available to a retiree.

This does not mean annuities are unnecessary. It means Social Security and annuities should be coordinated instead of evaluated separately.

Social Security Is More Than a Monthly Check

Social Security retirement benefits possess several characteristics that are difficult to reproduce with a private financial product:

Income that continues for life

Annual cost-of-living adjustments

Protection against living longer than expected

Potential benefits for a surviving spouse

No direct exposure to stock-market losses

Social Security benefits receive cost-of-living adjustments based on inflation measurements established under federal law.

That inflation adjustment matters. A fixed monthly payment can lose substantial purchasing power during a retirement lasting 20 or 30 years. Social Security is designed to increase as measured living costs rise, although its adjustment may not perfectly match each household’s actual expenses.

What Happens When You Claim Early?

People can generally begin receiving retirement benefits at age 62, but starting before full retirement age results in a permanently reduced monthly benefit.

For people born in 1960 or later, full retirement age is 67. Someone beginning benefits at exactly 62 may receive approximately 30% less than the benefit available at full retirement age.

That reduction does not disappear once the person reaches age 67. Future cost-of-living adjustments are generally applied to the lower starting benefit.

Claiming early therefore affects more than the first few years of retirement. It establishes a lower income floor that may remain in place for the rest of the retiree’s life.

What Happens When You Wait?

After reaching full retirement age, Social Security provides delayed retirement credits for each month benefits are postponed, up to age 70. No additional delayed retirement credits are earned after age 70.

For someone born in 1960 or later, beginning benefits at age 70 results in a monthly benefit equal to 124% of the benefit available at age 67.

Consider a simplified example:

Benefit at age 62: approximately $2,100 per month

Benefit at age 67: approximately $3,000 per month

Benefit at age 70: approximately $3,720 per month

These numbers are illustrative, but they show the scale of the decision.

The difference between $2,100 and $3,720 is $1,620 per month, or $19,440 per year before future cost-of-living adjustments.

For someone who lives well into their 80s or 90s, the larger benefit can become increasingly valuable.

Delayed Credits Are Not Exactly an 8% Investment Return

You may hear that delaying Social Security provides an “8% return” each year after full retirement age.

That is a useful shorthand, but it can be misleading.

The delayed retirement credit increases the future monthly benefit by approximately 8% for each full year of delay after full retirement age, subject to the claimant’s birth year. It is not an investment account earning 8%, and there is no account balance that can be withdrawn or inherited.

The value comes from receiving a larger inflation-adjusted payment for as long as the claimant lives.

That makes delaying Social Security primarily a longevity decision, not simply an investment-return decision.

Why This Can Be Difficult for a Commercial Annuity to Match

Retirement researcher Wade Pfau has described Social Security as an unusually valuable form of longevity insurance.

In a comparison reported by Barron’s, Pfau evaluated delaying Social Security from age 62 to 70 against purchasing a private annuity at 62 with income beginning at 70. The analysis cited an implied payout rate of approximately 9.6% from delaying Social Security, compared with commercial payout rates of approximately 7.7% for men and 7.2% for women under the assumptions used. The commercial product in the comparison included a fixed 3% annual increase, while Social Security provides cost-of-living adjustments tied to inflation.

That does not mean every individual will receive greater total dollars by waiting. A person must live long enough for the larger payments to compensate for the benefits they chose not to collect earlier.

It does mean that someone who wants to purchase more guaranteed income should first examine whether delaying Social Security allows them to obtain a particularly valuable form of inflation-adjusted lifetime income.

Where Annuities Fit

Annuities can still play a critical role in retirement planning.

The mistake is treating the choice as:

Social Security or an annuity.

A stronger plan may use them together.

An annuity can potentially:

Provide dependable income while Social Security is delayed

Cover essential expenses not met by Social Security

Reduce reliance on unpredictable market withdrawals

Create income for a spouse

Provide tax-deferred accumulation

Address long-term-care or legacy objectives when appropriate features are available

For example, someone retiring at 65 may want to delay Social Security until 70 but still need income during those five years.

A properly selected annuity, bond ladder, cash reserve, or planned portfolio withdrawal strategy could help fund that bridge period. Once Social Security begins at 70, the retiree receives a larger inflation-adjusted benefit for life.

Recent retirement-income commentary has specifically discussed using annuities or other protected assets to cover the income gap while delayed Social Security benefits continue to grow.

This approach allows the annuity to complement Social Security rather than compete with it.

Be Careful When Comparing Social Security With an Annuity Roll-Up Rate

Some annuities offer an income rider with a roll-up rate during the deferral period.

A hypothetical 7%, 8%, or 10% roll-up can sound similar to Social Security’s delayed retirement credits. But they are not necessarily measuring the same thing.

An annuity roll-up rate is commonly applied to an income benefit base used to calculate future guaranteed withdrawals. The benefit base may not be the contract’s cash value, surrender value, or death benefit. It generally cannot be withdrawn as a lump sum.

The future income also depends on factors such as:

The initial premium

The rider’s roll-up formula

The owner’s age when income begins

The contractual payout percentage

Fees and rider charges

Withdrawal provisions

Whether income increases with inflation

The insurer’s claims-paying ability

Therefore, a high roll-up rate does not automatically mean the annuity will create more spendable lifetime income than delaying Social Security.

The correct comparison is not one advertised percentage against another.

The correct comparison is:

How much reliable income will each strategy produce, when will it begin, will it increase, how long can it last, what liquidity remains, and what happens to a surviving spouse or beneficiaries?

Waiting Until 70 Is Not Right for Everyone

Delaying Social Security can be powerful, but it is not an automatic recommendation.

Claiming earlier may make sense when someone:

Has a materially shortened life expectancy

Needs the income for essential living expenses

Has limited savings available to fund the delay

Is coordinating spousal, survivor, dependent, or disability benefits

Wishes to preserve other assets for heirs

Faces tax or portfolio circumstances that favor an earlier claim

Places greater value on receiving income sooner than maximizing later income

Research on claiming decisions also recognizes that the optimal age depends on an individual’s wealth, health, preferences, family situation, and ability to finance the years before benefits begin.

The goal is not to make everyone wait until 70.

The goal is to prevent someone from claiming early without understanding what they may be giving up.

Married Couples Should Think Beyond One Lifetime

For married couples, the decision can be especially important.

The benefit connected to the higher earner may eventually affect the income available to the surviving spouse. In many cases, delaying the higher earner’s benefit can help establish a larger survivor-income foundation.

A claiming decision should therefore consider:

Both spouses’ ages

Each spouse’s earnings record

Health and longevity

The age difference between spouses

Other guaranteed income

Which spouse is more likely to survive longer

The household’s income after the first death

A strategy that appears less attractive based only on one person’s break-even age may look much stronger when the surviving spouse is considered.

A Better Way to Build Retirement Income

A complete retirement-income plan should answer three questions:

What income do you already own?
Social Security, pensions, rental income and other dependable resources.

What income can be strengthened?
This includes evaluating whether delaying Social Security could increase the household’s lifelong income floor.

What gaps still remain?
Annuities, investments, cash reserves, home equity and other resources can then be coordinated to address those gaps.

The order matters.

Before purchasing additional guaranteed income, it is sensible to determine whether you can first maximize the inflation-adjusted lifetime income already available through Social Security.

Annuities can be excellent retirement tools. But their strongest use may not be replacing Social Security income.

Their strongest use may be helping you delay Social Security, filling the remaining income gaps and creating a retirement plan that does not depend entirely on market performance.

The Bottom Line

Claiming Social Security early may solve an immediate income need, but it can also permanently reduce future retirement income.

Waiting until age 70 can provide a significantly larger monthly benefit, inflation adjustments and stronger longevity protection. For people who can afford to wait and who live a normal or extended lifespan, that larger income may be difficult to reproduce through a commercial product.

Annuities remain valuable because they can provide guarantees, stability and planning flexibility that Social Security alone cannot provide.

The most effective strategy is often not choosing one over the other.

It is designing them to work together.

Ready to Take the Next Step?

Retirement isn't just about numbers. It's about the life you've worked so hard to build.

Whether your dream is traveling more, spending time with your grandchildren, supporting the causes you care about, or simply enjoying the peace of knowing your bills are covered, your financial decisions today can shape the future you envision.

I believe every family deserves honest guidance, thoughtful education, and a retirement strategy built around their unique goals—not a one-size-fits-all recommendation.

Throughout my career, I've had the privilege of helping individuals and families navigate important financial decisions involving retirement income, life insurance, annuities, mortgages, and real estate. One thing I've learned is that every family's story is different, and every retirement plan should be too.

Before we ever talk about products or strategies, I want to understand you.

What does financial freedom mean to you? What are your biggest concerns? What kind of legacy do you hope to leave? Those conversations are the foundation of every recommendation I make because the best plans begin with listening.

My role isn't to tell you what to do. My role is to educate you, simplify complex financial decisions, and help you feel confident in the choices you make for yourself and your family.

Whether you're just beginning to plan for retirement or looking for a second opinion on your current strategy, I'd be honored to be a resource for you.

Why "Roots & Wealth"?

When I chose the name Roots & Wealth, it wasn't just because it sounded good. It reflects what I believe financial planning should be.

Just like a strong tree, lasting financial security begins with strong roots.

Those roots are built through education, thoughtful planning, meaningful conversations, and decisions that align with your values. Wealth isn't only about the size of your portfolio—it's about having choices, creating stability, protecting the people you love, and living with confidence.

Life will bring changing seasons. Markets will rise and fall. Tax laws will change. Unexpected challenges will happen. But when your financial foundation is built on strong roots, you're in a better position to weather those changes and continue growing.

That's the philosophy behind everything I do.

My goal is to help you build a retirement strategy that's deeply rooted in what matters most to you, so you can enjoy today while creating a lasting legacy for tomorrow.

If you're ready to build a retirement strategy with confidence and clarity, I'd love the opportunity to meet you. Schedule your complimentary Retirement Strategy Consultation and let's start growing your Roots & Wealth together.

Educational Disclosure

This article is for educational purposes only and is not financial, tax, or legal advice. Annuity products are insurance contracts. Guarantees are backed by the claims-paying ability of the issuing insurance company. Product availability, rates, surrender schedules, withdrawal provisions, riders, caps, participation rates, spreads, and other terms vary by carrier and state. Withdrawals may be subject to surrender charges, taxes, and, if taken before age 59½, potential IRS penalties. Fixed index annuities are not stock market investments and do not directly participate in any stock or equity index. You should review your personal situation with a qualified professional before making a decision.