If you’ve spent any time planning for retirement, you probably know the basics of Social Security: most people can start claiming benefits at age 62, reach “full retirement age” (FRA) between 66 and 67 depending on their birth year, and can delay benefits until age 70. [1]
The longer you wait, the larger your monthly payment — delaying past your FRA can increase your benefit by up to 8% per year, according to the Social Security Administration (SSA). [2] That sounds like a great deal on paper. But in practice, the decision is more complex and, for some retirees, delaying could end up costing money.
Here’s why the simple math behind delaying benefits doesn’t always add up.
The problem with the “basic math” behind delaying Social Security is that it often overlooks longevity risk. While it’s true that waiting longer increases your benefit, your total lifetime payout could be lower if you don’t live as long as expected.
For example, if you wait until age 70 to start collecting benefits but pass away at 72, you’ve only received two years of payments. Claiming earlier — even at a reduced rate — could have resulted in a larger total payout over your lifetime.
If you pass away before 70, you’ve effectively received nothing from a system you’ve spent decades paying into.
To be fair, estimating longevity is inherently uncertain. According to the Peterson-KFF Health System Tracker, average life expectancy in the U.S. is approximately 78.4 years — but individual outcomes vary widely. [3] Many people live into their 80s and 90s, while others don’t reach average life expectancy.
To help navigate this uncertainty, many financial advisors use a “breakeven age” analysis. This calculation estimates the age at which the cumulative benefits from delaying Social Security surpass those of claiming earlier.
For instance, someone eligible for $2,000 per month at their full retirement age of 67 would need to live to about 78 years and eight months to break even compared to claiming at 62. If they wait until age 70, the breakeven age rises to roughly 80 years and five months. [4]
However, even this analysis has limitations — it typically doesn’t account for the time value of money, or the opportunity cost of accessing and investing earlier benefits.
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If you retire at 62 but delay claiming Social Security until 67, you may have to rely on withdrawals from your savings or tax-advantaged accounts like a 401(k) to cover living expenses. By doing so, you’re forgoing the potential investment returns those funds could have earned if left untouched.
This trade-off is known as opportunity cost, and it’s an important factor to consider in retirement planning.
When you factor opportunity cost into your breakeven analysis, the age at which delaying benefits becomes advantageous can be pushed significantly further out.
For example, someone eligible for $2,000 per month at full retirement age of 67, assuming a 5% annual return on their investments, would need to live approximately 88 years and eight months to breakeven.
If the expected return is 8% annually, the breakeven point may not be reached within a typical lifespan. In other words, claiming benefits earlier while keeping retirement savings invested could yield a better financial outcome in this scenario.
Because the basic math behind Social Security decisions often overlooks key variables — and estimating factors like investment returns or longevity is inherently uncertain — working with a qualified financial advisor can be a smart move.
A professional planner can help you account for additional considerations such as inflation, estate planning, healthcare costs, and annual spending needs.
The bottom line: oversimplifying your retirement strategy could be costly. A more comprehensive, personalized approach can help you make better-informed decisions and improve your long-term financial outcome.
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[1]. Social Security Administration “See Your Full Retirement Age (FRA).”
[2]. Social Security Administration “Delayed Retirement Credits.”
[3]. Peterson-KFF “How does U.S. life expectancy compare to other countries?”
[4]. [Approach Financial]https://www.approachfp.com/social-security-calculator-breakeven-monthly-strategy/) “Social Security Calculator – Breakeven and Monthly Income.”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
