Should You Begin Collecting Social Security At 62, 67 Or 70? — The Right Answer May Depend On Your 'Break-Even Point' Or Life Expectancy

For decades, the question of when to claim Social Security benefits has sparked heated debates around dinner tables and in online forums. Some advocate taking the money and running at 62, the earliest possible age. Others preach the virtues of patience, advising to wait until 70 to maximize those monthly checks.

In the middle, are the pragmatists who split the difference, filing for their full retirement benefits at age 67 (or 66 for those born before 1960). Each camp has fervent supporters, armed with calculators, life expectancy charts and tales of financial freedom or destitution to plead their case.

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Crunching The Numbers: A Breakeven Analysis

For each year you delay claiming Social Security beyond your full retirement age, your monthly benefit increases by about 8% until age 70. So if your full retirement age benefit is $2,000 per month, waiting until 70 boosts that to $2,640 — a 32% raise. 

You’ll miss out on years of payments by delaying your claim, but most studies show a “breakeven point” where the total lifetime benefits received from an early claim catch up to the higher monthly payments of a delayed claim. For an average life expectancy, that breakeven age is around 78 to 81.

Playing The Longevity Odds

Should you take the plunge at 62 and the reduced benefits that come with it? Or wait until 70 for the maximum monthly payout, betting you’ll live past that breakeven point?

Much depends on your life expectancy projections. If you come from a family with a history of longevity and have confidence in making it into your mid-80s or beyond, delaying until 70 may net you more total income over your lifetime.

But if your health indicators or family history suggest a shorter life expectancy, the breakeven math points toward taking benefits earlier. Keep in mind that this is merely probabilities and odds — no one can predict the future with certainty.

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More Than Just A Math Problem

Factors beyond maximizing total lifetime benefits could influence when you claim Social Security:

• Will you need income before age 70 to cover living expenses?
• How will Social Security benefits be taxed combined with your other income sources?
• If you claim early while still working, will you face benefit reductions from the earnings test?

Not to mention the critical question of how your claiming age will impact potential survivor benefits for your spouse.

The great Social Security age debate rages on, with rational arguments on multiple sides. Perhaps there is no perfect one-size-fits-all answer. The “best” claiming age depends on your situation, life expectancy and financial needs. The only wrong choice may be not weighing your options carefully before deciding when to begin collecting Social Security benefits.

It's a good idea to consult a qualified financial advisor who specializes in Social Security claiming strategies and can analyze your complete financial picture. An expert can run advanced claiming scenarios, factoring in all the variables unique to your circumstances.

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*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.

Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.