Mr. Money Mustache (MMM) might be the “Paul the Apostle” of the financial independence / FIRE movement, a relentless missionary spreading the Lord’s word far and wide. If MMM hasn’t converted more people to FIRE than anyone else, he’s got to be near the top of the list. Perhaps his most famous sermon is The Shockingly Simple Math Behind Early Retirement. I can attest – it steered me down a path that led me to where I am today. Hallelujah. MMM is great. Thank you, MMM. But with an audience of…millions?…there is a big responsibility to share accurate advice. But, lest I blaspheme, I think his recent work is dead wrong. False Profit MMM recently wrote a post called, The Shockingly Simple Math Behind Social Security. While the article has a few different subtle points, the main thrust is that taking Social Security at age 62 is better than at any other age because, in short, stock index funds grow faster than Social Security benefit increases. …Am I really telling you that it’s actually less valuable to work longer so you can get the higher [Social Security] benefits? The answer is yes, for people who understand the concepts of “investing” and “the time value of money. To really understand this, just imagine what would happen if you started taking those payments as early as possible (age 62) and tossed them into an index fund, earning 6% after inflation on average. After the first year, you’d already have about $24,300 and you’d still be piling in that extra two grand per month and the whole snowball would be starting to compound.  By the time your more patient friends started drawing $2796 payments five years later, you’d already have over $137,000. It’s such a big lead that the 67-year-old will never catch up. MMM is but the latest victim of a fatal logical flaw in Social Security analysis. “They Repeat Their Folly” In MMM’s defense, he’s far from the first and won’t be the last person to make this mistake. What mistake? The discount rate. Discount rates help us compare present values to future values (or past values). Warren Buffett would say that discount rates started with Aesop – a bird in the hand is worth two in the bush. MMM’s discount rate is flawed. It’s that line where he says, “…earning 6% after inflation on average.” He’s actually using ~9%, because the 6% is inflation-adjusted (6% + 3% for inflation = 9% nominal index fund returns). “But Jesse! Stock index funds DO earn something like 9% per year over long periods of time!” That’s correct. But it’s incorrect to use that as your discount rate here. Why? Because when choosing a discount rate, it’s important to match the risk of the cash flows. In simple terms, that means our discount rate must reflect the “risk” built into Social Security. A common phrase in discount rate discussions is