The Break-Even Age for Delaying Social Security -- and Why It Does and Doesn't Matter Right Now

Social Security is a big deal for retirees, even though the average monthly retirement benefit was only $2,081 as of April -- amounting to around $25,000 annually. Of course, if your lifetime earnings have been above-average, your benefits will be above average, too.

A key question as we approach retirement is when to claim our benefits and start collecting checks. As you deliberate, think about when you'll break even -- depending on when you start.

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Social Security basics

Each of us has a full retirement age at which we can start collecting the full Social Security benefits to which we're entitled based on our earnings. The full retirement age is 67 for those born in 1960 or later.

But we can start collecting our benefits as early as age 62, or we can delay until age 70. Claiming sooner results in smaller benefits (but many more checks) and delaying will make your benefit checks bigger, though you'll receive fewer of them.

The table below shows the percentage of your full benefits you'll receive at each starting age:

Data source: Social Security Administration.

When to claim? Consider the break-even age

As you deliberate when to turn on your Social Security spigot, consider your break-even age. It's the age you'll need to reach to make having delayed receiving your Social Security benefits worthwhile -- when your total lifetime benefits from claiming at one age equals those of claiming at another age.

When calculating your break-even age, set up a my Social Security account at the Social Security website, so that you can see estimates of your future benefits.

The break-even age for many people who are wondering whether it's worth not claiming as soon as possible at age 62 is generally between about 77 and 81, so that if you expect to live beyond those ages, it makes sense to wait. The break-even age between claiming at 67 and 70 is closer to 82. If you stand a good chance of living a long life, you'll likely get the most in total benefits by delaying.

The break-even age, reconsidered

But don't put too much stock in the break-even age -- because:

• You probably don't know exactly how long you'll live, especially if you're still youngish and don't know what health conditions you might develop. That makes it hard to calculate a precise break-even age.
• It might matter more to follow a Social Security-claiming strategy with your spouse -- because when one dies, the other will be able to collect the larger of the two benefits. So the higher earner might want to try delaying until age 70 to maximize that benefit, while the lower earner might start collecting whenever that income is needed.
• Break-even calculations often ignore whether you'll spend or invest your benefits.
• Some people will simply need to start collecting benefits as soon as possible, because they need the income.
• Various studies have found that most (but not all) people will get the most total benefits from Social Security by delaying claiming until age 70.

Consider these points as you deliberate when to claim Social Security.

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