Is Life Too Short to Delay Social Security Benefits?

Social Security is a great source of retirement income for many people. For some, it’s their only source. The amount of Social Security benefits you’ll receive largely depends on how many years you’ve worked, how much you earned during your working years, and when you decide to begin receiving your benefits. You can start taking Social Security benefits at age 62, but your baseline benefit amount is based on your full retirement age (FRA), which is determined by the year you were born:

Birth Year
Full Retirement Age
1943 to 1954
66
1955
66 and 2 months
1956
66 and 4 months
1957
66 and 6 months
1958
66 and 8 months
1959
66 and 10 months
1960 or after
67

Data source: Social Security Administration

Image source: Getty Images.

Delaying your benefits

If you’re fortunate enough to not have to take your Social Security benefits early or at your FRA, you can delay them until you reach age 70, increasing the monthly benefit. Even though the monthly benefits may be higher, delaying your Social Security benefits can be overrated. Here are the maximum monthly payouts allowed for those retiring at their FRA in 2022:

Age 62: $2,364
Full Retirement Age: $3,345
Age 70: $4,194

The jump in benefit amount between age 62 to 70 may seem enticing, but it’s important to keep one thing in mind: There are a lot of months — and therefore checks — between 62 and 70 that you’d be foregoing. Ninety-six months, to be exact. Even if you decide to delay benefits from your FRA, that’s 36 months of no checks if your FRA is 67.

It takes a while to play catch-up

One of the most important things to consider when deciding whether delaying benefits for fewer, larger checks is worth it is your “breakeven point.” Your breakeven point occurs when the total amount you’ve received from larger, delayed benefit checks equals and begins to surpass the total amount you would have received by taking smaller checks earlier.

Let’s imagine you were born July 1, 1970, and make $80,000 annually. Based on Social Security’s benefits calculator, here are your approximate monthly benefits and the total amount awarded by different ages:

Age
Monthly Benefit
Total Received by 80
Total Received by 85
62
$1,594
$344,304
$439,944
67
$2,396
$373,776
$517,536
70
$3,060
$367,200
$550,800

Data source: Social Security Administration

Even with more than a $1,400 monthly increase by taking benefits at 70 versus 62, you would have “only” received around $23,000 more total by the time you reached 80. If you had waited until FRA to claim benefits, you would still have received more in total by age 80 than if you had delayed your benefits until 70. Again, what’s important here is your breakeven point. In this example, it happens around age 78. At age 78, the total amount you would have received by delaying benefits outpaces the total amount received by taking benefits at 62. Your breakeven point will vary based on your specific benefit, so it’s important to make the calculations based on your personal total.

Life can be too short

Average life expectancy in the U.S. is 77. Delaying Social Security benefits because you assume you’ll live long enough to justify the years of missed benefits might not be the best move for everyone. Of course, nobody wants to assume they won’t make it to see their breakeven point. And many people will live to see it and years beyond, but it’s important not to rely too heavily in your decision-making on what is ultimately an unknown assumption.

Deciding whether to delay benefits is a challenging decision based on some variables you can’t know for certain. It’s also a decision that requires you to consider many personal things, like your family history, health history, and retirement goals. There is no right or wrong decision you can make, just an informed decision that best benefits you and your personal situation.

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