Don’t Expect to Live Past 80? Claiming Social Security Early Is the Right Math, and Here’s the Break-Even Age
Waiting longer to claim Social Security sounds like the obvious move, but for millions of people that advice quietly costs them thousands of dollars. Your life expectancy changes the math in ways most retirement guides never bother to spell out.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
One of the hardest financial decisions you might have to make in the course of your retirement planning is figuring out when to claim Social Security. Although benefits are available to you beginning at age 62, there are financial incentives to wait longer.
If you were born in 1960 or any year after, your full retirement age (FRA) for Social Security purposes is 67. That’s when you can collect your benefits without a reduction.
You can also delay your claim past FRA if you so choose. Each year you wait past FRA boosts your monthly checks by 8%, up until age 70.
Some financial experts might say that delaying Social Security is a smart move, since it boosts checks automatically and leads to more guaranteed monthly income. But if you don’t expect to live past the age of 80, it may not make sense to delay Social Security at all.
Pay attention to lifetime benefits
Claiming Social Security at age 70, or another age past FRA, will result in boosted monthly checks. But that doesn’t guarantee you a larger lifetime Social Security benefit.
The reality is that a delayed claim can work out well financially when you live long enough to make up for months or years of missed checks earlier. But if you don’t expect to live past age 80, the math doesn’t tend to work in favor of filing later.
Let’s assume you’re entitled to $2,000 a month in Social Security at 67. Waiting until 70 will give you $2,480 a month instead, but you’ll lose out on three years of benefits.
You would need to live to 82 and 1/2 to break even in that scenario — meaning, to collect the same amount of Social Security in total based on filing at either 67 or 70. But if you only end up living until 80, filing at 70 instead of 67 will leave you with $14,400 less in Social Security on a lifetime basis, despite boosting your checks.
In fact, in general, if you don’t expect to live a particularly long life, it doesn’t make sense to delay Social Security. The one exception may be if you have a spouse who’s likely to outlive you and you’re the higher earner in your household. In that case, a delayed claim could leave your spouse with a larger survivor benefit.
But if you’re single or divorced, you don’t have to factor a spouse into the equation. And in that case, if you don’t expect to live past 80, you shouldn’t delay Social Security as long as possible.
Come up with your own strategy
It’s easy to get caught up in Social Security strategies you see online. But it’s important to remember that everyone’s needs are different, and the right filing age for one person may not work out well for another.
If you’re trying to decide when to claim Social Security, think about your:
- Assets outside of those monthly benefits
- Spending needs in retirement
- Health and life expectancy
- Marital status
You may also want to consult a financial advisor for help in coming up with the optimal time to file for benefits based on the factors above and others they might help you think of.
Contact [email protected] for any questions or corrections.
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.
