Should you apply as soon as you are eligible and take reduced benefits for life, or wait until your full retirement age and get a bigger check each month?
Or maybe you should delay your benefits for a few years after full retirement age—up to age 70—to ensure an even bigger Social Security check.
When Should You Apply for Social Security Benefits?
Deciding when to apply for Social Security benefits is difficult for many people. One reason is that the right time is different for everyone, and it depends on many personal factors—from how long you’re likely to live…to how long you plan to keep working.
Basically, if you start receiving Social Security benefits later, you get a larger monthly check because your total benefits are spread out over fewer years. By contrast, if you elect to receive Social Security benefits early, say at age 62, then you get a reduced monthly benefit for more years.
Breaking Even on Social Security Benefits
Whether you start receiving lower benefits early, or higher benefits later, at some point you will “break even,” which means you will have received the same amount of money from Social Security no matter when you started.
After you reach the break-even point, a lower benefits check continues to be lower every month for the rest of your life, and a higher benefits check continues to be higher. That’s why people who choose to receive Social Security benefits early often consider their break-even age the point at which they begin to lose money.
Your Social Security break-even age can be useful information to have. While it's impossible to know exactly how long you will live, you can make a reasonable guess about your longevity based on your current health and your family history. If, for example, your break-even age is 78 and you think you could live to be 100, you might opt to receive larger checks later.
For a better understanding of how break-even points are calculated, see a Social Security benefits example on the Social Security Administration Web site.
How to Calculate Your Social Security Break-even Age
Knowing your break-even point can help you make a more strategic decision about when to apply for Social Security benefits. Fortunately, the Social Security Administration provides a handy "break-even age calculator" to help you figure out your personal break-even point.
To use the “break-even age” calculator effectively, you'll need your current Social Security benefits estimate, which is mailed to you annually about three months before your birthday.
If you don’t have your benefits estimate handy and just want a general idea of when you’re likely to break even under different scenarios, you can use the Social Security Quick Calculator to get a ballpark estimate of your benefits and use that to calculate your break-even age.