Good to Know

When will our universe stop expanding? What age should you claim Social Security Retirement benefits? For too many of us, these two questions are equally confounding. The author cannot help you with astronomical riddles but can illuminate some of the key factors that should inform your claiming age decision.


This is the first in a series of blogs on this topic and today’s focus is upon life expectancy and its impact upon claiming age. You have these three claiming age choices:

$0.70 Get paid 4 to 5 years longer vs. claiming on time Permanent reduction of monthly benefit by up to 30% Those with shorter-than average life expectancy
On Time
$1.00 Receive 100% of your full monthly benefit Must wait until full retirement age (65 to 67) Those with at least an average life expectancy
$1.32 Permanent increase in full monthly benefit up to 32% Must delay past full retirement age Those with an average or longer life expectancy

What are the real-life implications of the chart? We could ask that question another wayow about an annual raise of about $21,000 for the rest of your life?”

  • The maximum monthly retirement benefit at normal retirement age is $2,861 (2019, as indexed) or about $34,300 annually.
  • Collecting retirement benefits too early (age 62) can slash the annual benefit to under $24,000 (2019).
  • Delaying until age 70 catapults the annual benefit to over $45,000 (2019).
  • The spread (“raise”) from age 62 to age 70 can be about $21,000 (2019) per year.

Clearly, a lifetime of careful retirement planning can be undone with the wrong claiming age choice. Yet, a less-than-ideal retirement planning effort can be improved by the right claiming age choice. Choosing that age is fully within your client’s control and no factor in the decision is more important than life expectancy.

But, what about Social Security’s assumptions about your life expectancy?

The Social Security Administration designs the early retirement, normal retirement, and delayed retirement benefit payments to have approximately equal present values based upon average life expectancy.

Take a deep breath, the next point is not commonly understood but is among the most important factors in the claiming age decision.

Let’s think through the average life expectancy dynamic for just a moment.

  • The average life expectancy of a U.S. citizen born in 1954 was about 79 years; death would occur, on average, around 2039.
  • Yet, an actuary would tell you that the longer a person lives the more likely they’ll outlive their life expectancy.
  • Sound confusing? Here’s an example - Social Security actuaries estimate that one in every three 65-year-olds in 2019 will live until age 90! That’s about 11 years LONGER than their life expectancy at birth.
  • What’s the point? The longer we live, the more likely we are to outlive our life expectancy at birth.

It takes no large leap of faith to see that if we live until Social Security retirement age, even early retirement age, it’s likely we’ll outlive our original life expectancy. But that information alone, while helpful, begs the questionow do I connect life expectancy, financial breakeven and the claiming age decision?”

“Financial breakeven” is a not a new term for most but it may be new to see it applied to the claiming age. It is mathematically possible to calculate a financial breakeven age1 that balances the expected return from future higher benefits against the cost of giving up benefits today. The breakeven age averages between about 15 and about 20 years. A brief example may help.

Breakeven Age Example

John is a single, 62-year-old in average health who claimed benefits at age 62 in 2019. His full retirement age is 66. John understands that his benefits will be permanently reduced by his claiming early. If we assume a 15-year breakeven period, what exactly does that mean for John?

  • Winner - He collects more by claiming early if he dies before 2034.
  • Breakeven - He collects about the same as he would have if he claimed at age 66 if he dies in 2034.
  • Loser - John collects less, potentially much less, to the extent he lives past 2034.

Unless you have an illness that would shorten life expectancy or an extreme financial emergency, think long and hard before claiming benefits early.

If you have at least an average life expectancy and can make the cash flow work, strongly consider delaying the claiming age as long as possible, ideally to age 70.

Stay tuned! In our next blog we’ll illustrate ways to make the peanut butter and jelly come out even (pay the bills) from age 62 until age 70 for those interested in delayed claiming.

Disclaimer This blog discusses one, but not all, of the important factors in making the claiming age decision. The information presented herein is provided purely for educational purposes; it is not meant to and should not be used to provide financial advice to specific individuals.
Each individual will have their own specific needs and circumstances. The number of Social Security rules and interpretations of those rules number in the thousands. Consult a professional with specific experience in Social Security before making a claiming age decision.

1 A retired Social Security administrator analyzes breakeven ages under varying assumptions at the following link: Social Security Benefits A Break-Even Analysis.