What Is the Break-Even Age for Social Security?

What is the Social Security break-even age

Social Security retirement benefits are primarily based on two factors: your and your age when you claim them. You get to decide when to start collecting benefits, within an eight-year window from age 62 to age 70. The , the higher your monthly payment will be.
That means is in part a decision between collecting a smaller benefit for a longer period and starting later but getting a bigger monthly payment. If you live long enough, the cumulative benefits from the later, higher start will eventually catch up with the sum of reduced payments you can start drawing earlier. That catch-up moment is called the break-even age (or break-even point), at which the dollar value of claiming benefits later surpasses the value of taking them early. Determining your break-even point and weighing it alongside other factors such as your physical and financial health can help you decide when to start Social Security and get the most out of your benefits over your lifetime.

How age affects benefits

You become eligible to collect your full retirement benefit — 100 percent of the amount you’re entitled to receive based on your lifetime earnings history — at (FRA), which is 66 and 4 months for those born in 1956 and will gradually rise to 67 for those born in 1960 and later. The is 62, but Social Security by a fraction of a percent for each month before the FRA that you claim. Someone born in 1960 who starts benefits in 2022 will get as little as 70 percent of their full monthly benefit. That reduction is permanent. If you put off claiming benefits until after full retirement age, Social Security for each month of delay. That 1960 baby would get 124 percent of their full retirement benefit, for life, by waiting until their 70th birthday to start Social Security. Why do benefits increase if you wait past 62? Because Social Security works by the principle that over the course of a retirement, you should receive the same total amount regardless of the age at which you start benefits. Monthly payment levels are so that if you file for reduced benefits at 62, you will receive the same total amount as if you start at 70, or at any age in between, if you live to an average life expectancy. Of course, the average is just that — an average — and most people live either shorter or longer lives. That's where the break-even point comes in.

Calculating the cost of your decision

The break-even calculation is inexact; annual , and changes in your income if you’re , mean the amount of your monthly benefit can fluctuate even after you start collecting it. But you can still get a rough estimate of your break-even age. Say you are closing in on 62 and considering your benefit options. You know, from checking your online or using , that you are in line for an estimated $1,500 a month if you hold off claiming until your FRA of 67. Starting at 62, your payment would be 30 percent less, or $1,050 per month. So, between the ages of 62 and 67, you would receive approximately $63,000 in benefits ($1,050 for 60 months). If you wait until you turn 67, you give up that initial $63,000 but would receive $450 more per month, or $5,400 more per year. At that rate, it would take about 140 months (11 years and eight months) to make up for the money you’d forgo by claiming benefits later. At around age 78 and 8 months, you reach the break-even point, when your cumulative benefits from claiming at 67 surpass those you’d get by taking retirement at 62. You can use a similar calculation to determine the break-even age for taking your maximum benefit at age 70 — in this example, $1,860 a month. Starting at 62, your benefits would come to $100,800 over the next eight years. Starting at 70, you’d get $810 more a month, or $9,720 more a year. It would take 10.4 years to break even, so you’d be 80 and change when claiming your maximum monthly benefit begins to pay off in terms of total dollars.

Other factors to consider

When planning for retirement, however, there’s more to consider than just dollars and cents. You could pocket the most money in the long term by waiting to start your benefits, but only if you live past the break-even point. That’s where other factors such as your physical condition and family situation come into play. Suppose you reach claiming age in poor health. Do you expect to live long enough to make up for the payments you’d forgo by delaying? On the other hand, is your spouse going to be depending on your benefits ? The tradeoff for starting your payments early could be for your mate. Other income, or assets such as a pension or IRA, might affect your claiming decision. Perhaps you like your job and want to keep working well into your 60s, or you can afford to live on your savings while you delay Social Security and boost your eventual benefit. On the flip side, if you’re unable to work and need the money, collecting Social Security benefits early could help you make ends meet. A financial adviser can help you weigh the pros and cons to determine what option works best for you.

Keep in mind

You to start collecting retirement benefits by age 70, but beyond that point there’s no benefit boost for delaying your claim. While Social Security is, for most people, a guaranteed financial resource later in life, it is not designed to fully . Retirement benefits typically amount to about 40 percent of a worker’s career average earnings. The can help you develop a picture of your financial future, taking into account all sources of retirement income and estimating how much you’ll need to meet your needs. Updated March 7, 2022

More on Social Security Retirement Benefits

Q& A Tool

Find the answers to the most common Social Security questions such as when to claim, how to maximize your retirement benefits and more. Cancel You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits. Your email address is now confirmed. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also by updating your account at anytime. You will be asked to register or log in. Cancel Offer Details Disclosures

Close In the next 24 hours, you will receive an email to confirm your subscription to receive emails related to AARP volunteering. Once you confirm that subscription, you will regularly receive communications related to AARP volunteering. In the meantime, please feel free to search for ways to make a difference in your community at Javascript must be enabled to use this site. Please enable Javascript in your browser and try again.