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The break-even age represents the ideal period during which you can apply for Social Security retirement benefits so that you can fully maximize them. Timing is crucial when deciding when to take your benefits, as this will directly affect the amount you receive.
For example, the earliest you can start taking benefits is at 62 years old — but this will mean you’ll receive your Social Security benefits at a reduced amount.
Alternatively, you can choose to wait until you’re 67 or 70.
To figure out your break-even point on social security benefits, you can use a special calculator or consult with a financial advisor. In this article, however, we’ll take you through the basics of understanding your social security break-even point, as well as how to do a social security break-even analysis on your own.
How to calculate the Social Security break-even age?
As mentioned above, you can start taking your benefits at 62 and opt to receive a reduced amount. The upside of taking your benefits earlier is that you will receive more social security checks throughout your lifetime, provided that you reach your desired life expectancy.
However, if you choose to wait past your retirement age, then your benefits will increase year-over-year until age 70. Note that the full retirement age (FRA) of most Americans is around 66 or 67, but this will vary based on your birth year.
Now, if you wait until you’re 70 to claim your social security benefits, you will receive more than 100% of your monthly benefit amount. For example, if you were born in 1954, your FRA would be 66 years old.
This means that at 66, you’ll be receiving 100% of your monthly benefit per Social Security guidelines. If you wait until age 67, you’ll receive 108% of your monthly benefit, given that you delayed retirement for 12 months. And if you wait until age 70, you’ll get 132% of your monthly benefit since you delayed retirement for 48 months.
Conversely, if you choose early retirement and opt to take social security benefits at 62, you can receive your monthly benefits at a 30% reduction on average.
Deciding your break-even point for Social Security: 62 vs. 67 vs. 70
Your break-even point for social security is the point where you’ll benefit the most from either early or late retirement.
Some considerations in deciding your social security break-even age are:
● How many benefits you’re eligible for
● Your tax situation
● Economic conditions (i.e., inflation) and how these might affect your purchasing power
● The state of your health
● Cost of living
In general, however, the longer you can delay taking your benefits, the higher your monthly benefits will become. Keep in mind though, that if you plan to continue working to some extent while receiving your benefits, you could receive a reduced amount subject to taxes in accordance with Social Security thresholds.
In 2023, for instance, the annual limit for those under the FRA is $21,240. For those who have reached their FRA, the earning limit per year is $56,520.
How to figure out your full retirement age (FRA)
As we said earlier, your FRA will determine when you can receive your full social security benefit and this is determined from the year you were born. While the previous FRA was 65 years old for all Americans, amendments were introduced in 1983 to increase the retirement age over time.
Here’s a breakdown of the FRA depending on birth year:
FULL RETIREMENT AGE (FRA)
| Birth Year | Full Retirement Age |
| 1943-1954 | 66 years old |
| 1955 | 66 and two months |
| 1956 | 66 and four months |
| 1957 | 66 and six months |
| 1958 | 66 and eight months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 years old |
According to the Social Security Administration (SSA), the year of birth will also affect your annual delayed retirement credit. Below are the values showing the percentages of delayed retirement credit per year of birth:
DELAYED RETIREMENT CREDIT
| Birth Year | Credit Per Year |
| 1917-24 | 3% |
| 1925-26 | 3.5% |
| 1927-28 | 4.0% |
| 1929-30 | 4.5% |
| 1931-32 | 5.0% |
| 1933-34 | 5.5% |
| 1935-36 | 6.0% |
| 1937-38 | 6.5% |
| 1939-40 | 7.0% |
| 1941-42 | 7.5% |
| 1943 and later | 8.0% |
Using a Social Security break-even calculator
The SSA has a handy calculator that shows you the effect of either early or delayed retirement on your benefits. As mentioned earlier, there are several factors that may influence your decision regarding your break-even age. However, the calculator is helpful in determining when to take Social Security benefits.
In the example below, let’s assume that retiree Mary Shaw, who was born on June 15, 1958, wishes to take her social security benefits starting on December 2025. SSA then shows her the following computation:
Access the SSA Calculator here.
In our example, Mary will reach her full retirement age by February 2025, per the SSA. Her choice to take her benefits ten months after her retirement date will raise her benefit to 106.67% of her primary insurance amount.
You can also use this social security break even chart to determine your full retirement benefits in the event of delayed retirement:
| Your Full Retirement Age | Percent to Multiply Your Full Benefit By |
| 66 | 100% |
| 67 | 108% |
| 68 | 116% |
| 69 | 124% |
| 70 or later | 132% |
Note that the SSA website has a more detailed chart detailing exact percentages down to the number of months of your age. For example, if you’re 69 years old and four months, the percentage will be 126.7%. You can find it here.
Conclusion
Calculating how much you will get at certain points will help you determine the best break-even age for you. In addition to these figures, you should also keep other factors in mind, such as your overall expenses and cost of living upon retirement, your health issues and life expectancy, and whether you have other assets you can dip into if you choose to delay taking your Social Security benefits.
