Make Sure You Know This Social Security Number Before Deciding When to Claim Benefits

In the years leading up to retirement, one of the bigger decisions you have to consider is when to claim Social Security benefits. When you claim Social Security will permanently affect how much you receive monthly, so it's a decision you shouldn't make on a whim.

There's no "right" or "wrong" age to claim Social Security; just the age that makes sense for your personal situation. However, there are benchmarks you can use to help make your decision. One of those is the break-even age.

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What is your break-even age?

In Social Security, your break-even age is when the total benefits from claiming at one age equal those from claiming at another age. It's not an end-all, be-all, but it can help you decide whether smaller payments over a longer period or larger payments over a shorter period is the better route for you.

The good news is that break-even ages are the same no matter the amount of your projected benefit. For example, the break-even age between 62 and 67 is 78.7; between 62 and 70, it's 80.4; and between 67 and 70, it's 82.5.

Any time before the break-even age, your total benefits from claiming at the earlier age are higher. After the break-even age, total benefits from claiming at the later age are higher.

I used those three specific ages because 62 is the earliest you can claim benefits, 67 is the full retirement age for anyone born in 1960 or later, and 70 is the latest you can delay benefits and still receive delayed retirement credits.

Break-even age should only be one piece of your decision-making

After determining your break-even age, the next step should be to see how it fits with your personal situation.

For example, if your health is a factor or you have family health issues, claiming benefits early may be the best option, so you have more time to take advantage of them. If longevity seems to be in your favor, you may choose to delay benefits and maximize the monthly benefit.

If you can reasonably survive in retirement without needing Social Security (retirement accounts, investments, etc.), then delaying for the larger benefit may work in your favor. If Social Security will make up a good portion of your retirement income, you may want to claim benefits as soon as possible.

Again, there's no "right" or "wrong" claiming age. Make sure your decision takes the many working parts of your life into account.

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