Key Points
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Your full retirement age is when you’re eligible to receive your base benefit, called your primary insurance amount.
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Claiming Social Security before or after your full retirement age decreases or increases it, respectively.
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Your break-even age is when the total lifetime benefits from two claiming ages are equal.
One of the major decisions people have to make when they’re approaching retirement is when they’re going to claim Social Security. Everyone’s life and financial situations are different, so there isn’t a clear-cut “you should claim at this age” answer, but it is important to know the implications of your claiming choice.
Your primary insurance amount (PIA) is how much you’d receive in benefits by claiming at your full retirement age, but you can claim before then, beginning at age 62, or delay claiming past your full retirement age until you reach 70. The former will reduce your monthly benefits, but how much will they increase if you delay until 70?
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How much benefits are increased by delaying
Delaying Social Security benefits past your full retirement age increases them by 2/3 of 1% monthly, or 8% annually. For anyone born in 1960 or after, your full retirement age is 67, meaning delaying benefits until 70 would result in a 24% increase to your primary insurance amount.
For perspective, here is how much someone could expect by claiming at 70 versus a full retirement age of 67, based on their primary insurance amount:
| Primary Insurance Amount | Benefit Amount By Claiming at 70 |
|---|---|
| $1,000 | $1,240 |
| $1,500 | $1,860 |
| $2,000 | $2,480 |
| $2,500 | $3,100 |
| $3,000 | $3,720 |
Data source: Author’s calculations.
Should you delay benefits until 70?
Everyone likes the idea of a higher benefit, but is it worth waiting for years to claim it? The difference between claiming at 62 and 70 is 96 months of payments; the difference between 67 and 70 is 36 months of payments. The benefit amount will be smaller, yes, but that’s time you could be using your benefits for bills, vacations, or whatever you see fit.
In most cases, people are better off waiting until age 70 to claim to maximize their lifetime benefits. Based on break-even ages — which is when the total lifetime benefits from two claiming ages equal — and life expectancies, most people will live longer than the break-even age, making 70 the “better” option than earlier claiming ages.
That said, it’s important to consider factors such as personal health, family health history, and financial situation. If you or your family has a history of health issues, and longevity may not be on your side, claiming earlier to take advantage of benefits is likely the best route. The same goes for those who’ll need Social Security for their retirement expenses.
However, if you’re in good health and don’t need Social Security to maintain your finances in retirement (maybe you have a nice 401(k) nest egg or investments), then waiting until 70 is a great move.
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