Calculating The Social Security Breakeven

When faced with the decision of when to start collecting Social Security, most people take it early. Of the approximately 2.7 million newly retired-worker beneficiaries in 2021, 29% claimed benefits at age 62 (the first year of eligibility), and 57% were under the age of 66.

However, just because most people take Social Security early doesn’t mean it is the best financial decision. The following chart from JP Morgan’s Retirement Guide makes the point that if you only live until 77, you are better off taking payments starting at 62. If you live more than 77 years but less than 81, you benefit from collecting at full retirement age (age 67 for those born in 1960 or later). If you are going to live beyond age 81, you are better off waiting until age 70 to start collecting.

Someone receiving a maximum Social Security benefit that lives until age 90 would have received $503,000 more during his or her lifetime by collecting at age 70 rather than 62.

"That is great, but nobody knows how long they are going to live, and Social Security is going to run out of money, so you should get while the getting is good."

First, we admittedly don’t know how long you are going to live, but a 62-year-old man has a 58% chance of living until 81, a 62-year-old woman has a 69% chance of doing the same, and there is an 87% chance that at least one member of a married couple will make it to 81. So, statistically, your odds of living until the actuarial breakeven point are high.

Second, Social Security isn’t going away. There are countless ways they can improve the program’s long-term viability (here is a link to 10 reasonable options), but eliminating benefits for those at or approaching Social Security age is not one of them. The program is too important to too many people.

Finally, there are tons of caveats that change the calculations, and waiting may or may not make sense in your situation. But you don’t have to figure this out on your own. We are experts at analyzing claiming options. If you or your family members want to know when you should be collecting, download copies of your most recent Social Security statements from SSA.gov and let’s talk.