This article takes a long hard look at these three “facts” about Social Security filing age and shows the real math behind them. All three are only true to a point – and as you’re planning your Social Security filing age, you should understand the real truth behind these three items.
First, let’s look at the concept of delay.
You Should Always Delay Your Social Security Filing Age to 70
This one is the easiest to understand why it’s wrong – but the component of truth in it can be important because it could work in your favor to delay. Of course an absolute like this is going to be proven incorrect in some circumstances.
If you happen to be able to delay your Social Security filing age and you live a long time after age 70, over your lifetime you will receive more from Social Security than if you file early. However, if you need the cash flow earlier due to lack of other sources of income, filing early may be your only choice. Plus, if you don’t happen to live past the magic 80-82 age, you’ll do better off by filing early.
Filing earlier can provide income earlier, but depending on your circumstances you may be short-changing your family by filing early. When you file early, you are permanently reducing the amount of benefit that can be paid based on your earnings record. Your surviving spouse’s benefits will be tied to the amount that you receive when you file, and so if you delay to maximize your own benefit and your spouse survives you, you’re also maximizing the benefit available to him or her. This is to assume that your surviving spouse’s own benefit is something less than your benefit.
John has a benefit of $1,500 available to him if he files at age 66, his Full Retirement Age (FRA). His wife Sadie has a benefit of $500 available at her FRA. If John files at his age 62, his benefit is reduced permanently to $1,125 per month. When John dies, assuming Sadie is at least at FRA, Sadie’s benefit will be stepped up to $1,237 (the minimum survivor benefit is 82.5% of the decedent’s FRA benefit amount).
On the other hand, if John delayed his benefit to age 68, he would receive $1,740 per month since he has accrued delay credits of 16%. Upon John’s death, Sadie will receive $1,740 in survivor benefits. By delaying his benefit 6 years, John has improved his surviving spouse’s lot in life by over $500 per month. Of course this has required him to come up with the funds to get by in the meantime, and so if he has the funds available this makes a lot of sense. If he doesn’t have other funds available, one thing that can help matters out is if Sadie files for her own benefit at age 62 – this will provide them with $375 per month while John delays his benefits.
The key here is that it’s often wise for the member of a couple that has the larger benefit to delay filing for the longest period of time that they can afford, in order to increase the survivor benefit available to the surviving spouse. But it’s also often necessary to file earlier due to household cash flow shortages. As we’ll see a bit later, only the question of surviving benefits makes this delay a truism. Otherwise, it could be more beneficial to file earlier.
Increase Your Benefits by 8% Every Year You Delay Filing
This one again comes from a truth: for every year after FRA that you delay your Social Security filing age, you will accrue 8% in delay credits. But the year-over-year benefit differences are not always 8%, and often the difference is much less.
It is true that if you compare the benefit you’d receive at age 66 to the benefit you’d receive at age 67, it will have increased by 8%. However, if you compare your age 67 benefit to your age 68 benefit, it will have increased by 7.41%. This age 68 benefit is 16% more than the age 66 benefit, but only 7.41% more than the age 67 benefit.
The table below shows the year-to-year increases across the spectrum of filing ages when your FRA is age 66:
| Filing Age | Difference |
| 62 | |
| 63 | 6.67% |
| 64 | 8.33% |
| 65 | 7.69% |
| 66 | 7.14% |
| 67 | 8.00% |
| 68 | 7.41% |
| 69 | 6.90% |
| 70 | 6.45% |
And this table shows what the year-over-year increases are if your FRA is age 67:
| Filing Age | Difference |
| 62 | |
| 63 | 7.14% |
| 64 | 6.67% |
| 65 | 8.33% |
| 66 | 7.69% |
| 67 | 7.14% |
| 68 | 8.00% |
| 69 | 7.41% |
| 70 | 6.90% |
So as you can see, only from one specific year, your FRA, to the following year, is the increase 8%. Otherwise, with only the exception of one filing age (the difference between 3 years before FRA and 2 years before), the year-over-year increase is less than 8%, and sometimes it’s less than 7%.
The Break Even Point is 80 Years of Age
I’ve often quoted this – rarely pinning it down to a specific year, but giving the range of around 80 years old. It’s not that simple though when you consider all of the different ages that an individual can file.
For example, when deciding between a Social Security filing age of 62 versus filing at age 63, your break even point occurs at age 77 (when your FRA is age 66). But when deciding between age 63 and age 64 (with FRA at 66), the break even occurs at age 78.
On the other end of the spectrum, when choosing between filing at age 69 versus filing at age 70 (FRA of 66), the break even occurs at age 84 – considerably later than age 80. The break even for the decision to file at age 68 versus age 69 occurs at age 82.
The two tables below illustrate the ages at which the break even occurs between the various filing ages. This only illustrates the breakeven between in one year versus filing in the following year. In addition, this only considers one individual, not a married couple, as the variables become far too complex for this short article.
This first table is when your FRA is 66:
| Filing Age | Break Even |
| 62 | |
| 63 | 77 |
| 64 | 78 |
| 65 | 76 |
| 66 | 79 |
| 67 | 80 |
| 68 | 80 |
| 69 | 82 |
| 70 | 84 |
And this table shows what the differences are year-over-year if your FRA is age 67:
| Filing Age | Break Even |
| 62 | |
| 63 | 77 |
| 64 | 75 |
| 65 | 78 |
| 66 | 79 |
| 67 | 79 |
| 68 | 81 |
| 69 | 83 |
| 70 | 85 |
So the year-over-year break even point varies, depending on which Social Security filing age you’re considering. If the two options are earlier (before FRA) the break even point occurs before age 80. If at or around FRA, then the break even occurs right around age 80. But if the Social Security filing age you’re considering is near age 70, count on the break even being much later, as late as age 85.
Sterling Raskie, MSFS, CFP®, ChFC®
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Take it when you can, no one knows when the grim reaper comes a calling. Both my parents never collected a dime. Several good friends never did either. Still working and I’ve filed and bank the check every month.
Great information! I learn so much from these social security posts.
I wanted to clarify spousal benefits. I may be totally mistaken, but I thought that even if I waited to file until age 70, that the most my spouse could obtain in the event of my death, is the amount I’d receive at full retirement age and not the increased amount I’d get at age 70. I hope you’re right and I’m wrong because if you’re right, it means more money to my spouse.
Thanks for the affirmation!
Regarding your question, you’re confusing spousal benefits with survivor benefits. The most your spouse can receive in spousal benefits is 50% of the amount you’d receive at your Full Retirement Age. Survivor benefits for your spouse are 100% of the amount that you’re either currently receiving or would have received had you filed on the date of your death.
Spousal benefits are for when you’re still alive. Survivor benefits (as the name implies) are for after you’ve assumed room temperature. :)
Thanks so much Jim for clarifying spousal versus survivor benefits. You are correct and I had them totally confused. I am glad to know my spouse can get the increased amount I’ll receive at age 70 for survivor benefits. Thanks for this great informational website! I love it!
Glad to hear it was helpful to you!
I laud your addressing the myth that claiming delay is always warranted. Too many advisors promote this as a blanket truism. Although you discuss breakeven age as a potential factor, I suggest the prime consideration is your health, your spouses health and your family longevity history. Having a good handle on these can guide whether breakeven age is a worthy consideration.
Agreed. Although I didn’t explicitly call out the health and longevity issues, it was my intent to imply.
I’ve read your articles and have your book. I’m struggling with whether to begin drawing SS at age 62 (I retired from federal gov’t service in Aug @ 62) or wait until my FRA at 66. In reading your articles about the breakeven point, I don’t see any mention about the lost opportunity cost of keeping your IRA/401K money invested and earning interest. I’ve averaged about 8% in past years on my retirement savings. I’m curious how considering lost earnings on savings would impact this breakeven point?
Since the future gain is unknown and the gain by delaying benefits is known, it becomes very messy to project the lost potential gains by using the retirement funds while delaying benefits. In the end result, it’s your call – the Social Security benefit won’t break even (in a delay) before your actuarially-projected age limit, so if you think you’ll live longer than average it’s likely in your better interests to delay. Or if you believe you can get a better return on your investments by not delaying, choose that route.
FWIW, I think an apples to apples comparison is best. I assume with an 8% return the savings are a mix of investment types, each with their own risk profile. If you delay claiming, it is unlikely that your benefit will be reduced by the government, so a fairer investment comparison is something equally secure, perhaps T-bonds or insured CDs. Another way to think about delaying is as a form of longevity insurance, decreasing the impact of living longer than anticipated.
Hello Jim,
I am soon to be age 68 in March. My wife turns 67 the same month. We were fortunate enough to use file and suspend before it expired. My wife is currently receiving half of my social security while I continue to work.
This is a second marriage for both of us. During her first marriage she had a long stretch of time when she did not work and hence no social security during that period of time.
I plan to work until age 70 when my wife can have the largest survivor benefit amount. I don’t think her own social security at age 70 will be larger than what she is receiving currently using file and suspend although hers continues to grow.
Since my wife remarried, if I was to pass away before her does her first husband come into play with our scenario? He is currently living.
If the budget works out, does it make any sense for me to collect social security before age 70 say age 68 or 69? We have a small portfolio (under $100k) and a pension in play from before I remarried. I cannot change the beneficiary and name my wife so at the time of my death, if before her, the pension stops.
Currently, my salary is the bulk of our income and takes care of all of the bills.
My wife works part time, however, her income including the social security would not pay all the bills. I do have two term insurance policies in play – one ending when I turn 70 and another new one going until age 82. The amount of each policy is currently $150k.
Any recommendations, Jim?
Thanks,
Jeff
Answering your specific questions in order:
Q: Since my wife remarried, if I was to pass away before her does her first husband come into play with our scenario?
A: If you die, if your wife was married previously for 10 years or more, she would be eligible for spousal or survivor benefits based on her ex-spouse’s record, as well as survivor benefits based on your record. Only one of these benefits is payable at any time, but if one becomes more advantageous at a later date she could switch, as long as she’s eligible for the other benefit.
Q: If the budget works out, does it make any sense for me to collect social security before age 70 say age 68 or 69?
A: This is a question for your financial planner.
Jim – The breakeven chart shows some new info to me. For a FRA of 66, is it saying that the BE age for delaying until 70 is age 86? That’s quite a difference from age 80 that I was planning on.
No, James, the table I produced for the article above only shows the year-over-year break even points. So the figure next to age 70 is the break even point between filing at age 69 versus waiting to age 70. The break even point between age 66 and 70 is likely still around 80 (I haven’t run those numbers recently but that’s what I recall).
I don’t want to beat a dead horse, but let’s say I deferred at 66 and planned on taking it at age 70, which gives a BE of roughly age 80. At age 69, I decide momentarily that I want to start my benefit, then I decide not to after all.. How can that decision now bump the BE to age 86? I must be missing something.
For the record, no horses, alive or dead, were harmed in the writing of these comments.
You’re still looking at the differential between starting at age 66 versus age 70.
My table in the article is explicitly showing the break even point between the choice to start benefits from one year to the next. In your example this is looking at the choice between age 69 or age 70. If you started benefits at age 69, receiving an amount equal to 124% of your PIA and compared that to starting at age 70 with 132% of your PIA, until you reach age 86 the choice of starting at age 69 is superior to the choice of starting at age 70. During your 86th year (16 years after starting benefits at age 70), the age 70 option is superior.
For me, the only consideration is leaving the largest amount SS benefit possible for my spouse. All my retirement planning works backwards from that. So I had to plan for a interim source of income, and also work a year longer.