Jan 27, 2025
Are you considering delaying your Social Security retirement benefit until age 70, assuming the break-even age is 80? While this strategy might work for some, it’s not the best decision for everyone.
The amount of your benefit depends on the average income of your 35 highest-earning years, but timing matters, too. You can claim benefits as early as 62, but you’ll only receive 70% of your full benefit. Waiting until your full retirement age (FRA) — 66 to 67, depending on your birth year — guarantees you 100% of your benefit.
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If you delay beyond FRA, you’ll earn delayed retirement credits, boosting your benefit by 8% per year, until age 70. This can increase your payout to 124% of your FRA benefit. While many people delay their claim to maximize their total lifetime, this approach isn’t always ideal.
The thinking behind delaying benefits
The idea behind Social Security is that, regardless of when you claim, you’ll receive roughly the same total benefits over your lifetime — assuming you live an average lifespan. If you claim at age 62, you’ll get smaller checks over a longer period. Delaying past FRA means fewer checks, but larger ones.
The break-even point is when the total benefits from claiming early equal those from delaying. If you live longer than that point delaying your benefit results in a larger lifetime payout.
Understanding how this works can help you decide when to claim your benefit. But it’s not a simple calculation. Factors like inflation, tax rates and investment growth can all influence the outcome.
In some cases, though, waiting too long can be a mistake.
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Why waiting could backfire
While break-even points vary, a general rule of thumb is that it takes 12 to 14 years to break even if you delay your benefit until age 70. This means you may need to live into your 80s to make waiting worthwhile.
If you’re healthy and anticipate a long life, delaying might be worth the wait. But if your health is poor, claiming earling could make more sense. For example, if you anticipate your spouse outliving you and they have lower benefits, delaying ensures they’ll receive your higher benefits if you pass away — even if you haven’t yet claimed it.
You’ll also need to consider how waiting impacts your financial resources. If you’ve retired but are delaying Social Security until 70, you’ll need to rely on other income sources, such as savings or a pension, to cover living expenses. Without a decent income, you may have to draw down your investment portfolio more quickly than if you supplemented it with Social Security.
In some cases, this could cost you — especially if your portfolio has a higher rate of return (though returns are never guaranteed). Even with a fatter benefit check at 70, the opportunity cost of depleting your portfolio earlier might outweigh the higher Social Security payout.
That said, many retirees shift to lower-risk investments in retirement, which often produce lower returns. For those individuals, waiting to claim Social Security might still make financial sense.
Deciding when to claim Social Security is a complex decision that depends on your health, financial situation and investment strategy. Because it involves so many variables, consulting with a financial adviser can help you weigh your options and make the best choice for your financial situation.
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Vawn Himmelsbach is a veteran journalist who has been covering tech, business, finance and travel for the past three decades. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, Metro News, Canadian Geographic, Zoomer, CAA Magazine, Travelweek, Explore Magazine, Flare and Consumer Reports, to name a few.
