The Break-Even Age Where Delaying Social Security Stops Paying Off and How to Find Yours
Waiting longer to claim Social Security can mean bigger monthly checks, but at a certain age that advantage quietly disappears. Knowing exactly where that crossover falls for you could be the most important retirement calculation you ever make.
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One of the biggest decisions retirees face is when to claim Social Security. While you’re eligible to start benefits as early as age 62, waiting can significantly increase your monthly checks.
In fact, for every year you delay claiming beyond your full retirement age, which is 67 for people born in 1960 or later, your benefit grows by about 8% annually.
Now this incentive does run out once you reach age 70. But all told, you could boost your monthly checks significantly if you delay your Social Security claim as long as possible.
But that doesn’t mean waiting on Social Security is always the right move. To figure out if waiting pays, you must first land on your break-even age.
The importance of knowing your Social Security break-even age
In the context of Social Security, a break-even age is the age at which you’d receive the same lifetime income with two different claiming strategies.
Let’s say you’re trying to decide if you should claim Social Security at 67 versus 70. By waiting, you’ll receive larger monthly payments, but you’ll also forgo three years of benefits.
Eventually, those larger monthly checks could make up for the payments you skipped. The age when that happens is your break-even age.
As an example, if you’re eligible for $2,000 a month in Social Security at age 67, waiting until age 70 to file boosts your monthly checks to $2,480. By age 82 and 1/2, you’ll have collected a total of $372,000 in Social Security under both claiming strategies.
So at that point, what you’ll want to ask yourself is whether you’re confident you’ll live past 82 and 1/2. If you aren’t, then filing for benefits at 67 could make more sense than waiting until 70. But if you think you’ll live well beyond that break-even age, delaying Social Security until age 70 may be the better move.
How to find your Social Security break-even age
To calculate your own break-even age for Social Security, you need to do a few things.
First, you have to get an estimate of your monthly benefit, which you can do by creating an account at SSA.gov and accessing your most recent earnings statement. That statement should contain an estimate of your benefit based on your specific wage history.
Next, figure out how different filing ages will impact that benefit. If you file at 62, for example, your benefit will be reduced by about 30%, as opposed to increasing by 24% if you wait until 70.
From there, multiply your smaller benefit by the total number of months you delay. Then, divide your missed benefits by the monthly increase to find the number of months needed to break even, and add that number to your later filing age.
So let’s say your age-67 benefit is $1,800. Waiting until 70 boosts it to $2,232.
If you give up 36 months of benefits, you’re losing out on $64,800 in Social Security. Divide the monthly difference of $432 by $64,800 to get 150 months, which is the amount of time it will take to recover the income you gave up via your larger benefits.
Add 150 months, or 12.5 years, to your later claiming age of 70, and you arrive at a break-even age of 82 and 1/2.
Of course, this is a simplified calculation. It doesn’t account for cost-of-living adjustments or other factors.
The point, however, is that finding your break-even age could make it easier to decide when to claim Social Security. So it’s an extremely important exercise to run through.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
