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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.
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 (1).
While many people delay their claim to maximize their total lifetime, this approach isn’t always ideal.
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.
It’s also important to remember that the average life expectancy for Americans was 76.4 years in 2021, according to the World Health Organization (2). Meanwhile, the WHO estimated that the “healthy life expectancy” was just 63.9.
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.
Because the decision can have a lasting impact on your retirement income, it may be worth consulting a financial advisor who can walk you through your options and pinpoint the best time to claim your benefits.
But choosing the right financial advisor is crucial, as it can make or break your plans during retirement. You can connect with vetted FINRA/SEC-registered advisors near you through Advisor.com. Since their roster consists of fiduciaries, they are legally obligated to act in your best interests.
Here’s how to get started: Answer a few questions about your finances and your goals, and Advisor.com will comb through its network to find an expert best suited for you.
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 early 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 them.
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.
Without the monthly checks, having a well-stocked emergency fund is key. Setting aside enough cash to cover six to 12 months of expenses can help you avoid tapping into your investments too soon. It also gives you more breathing room to let your benefits — and your portfolio — grow.
With a Wealthfront Cash Account, you could earn up to 4.15% APY on your emergency savings for your first three months (0.65% APY boost on top of the 3.50% base variable APY). That’s over ten times the national deposit savings rate of 0.40%, according to the FDIC’s October report.
Wealthfront doesn’t have any account fees or minimum balance requirements — allowing you to open an account with as little as $1. What’s more, you can enjoy 24/7 instant withdrawals and free domestic wire transfers, ensuring your funds remain accessible at all times.
Long-term, you may also want to create reliable passive income sources that can also reduce your dependence on Social Security and strengthen your overall retirement plan. That’s where platforms like Mogul come in.
Mogul is changing the game by letting everyday investors buy fractional shares of income-producing rental properties.
You can collect monthly rent checks, benefit from property appreciation and tax savings — all without the usual six-figure down payment.
Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide for you. Every property goes through a strict screening process and must project a minimum 12% return, even in downside scenarios.
Mogul’s portfolio averages an 18.8% IRR and 10–12% annual yields, and many offerings sell out within hours. Average investments typically range from $15,000 to $40,000, and your stake is backed by real property.
Getting started is a quick and easy process. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.
When it comes to drawing down on your social security, just keep in mind that, 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. Make sure to do your due diligence and talk to an expert before making any long-term decisions.
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