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72° Good Afternoon

# Social Security ‘break-even’ point has many variables

Here’s my understanding: Actuarial tables indicate I’ll live until age 82. That’s the Social Security “break even” point because at that age, I’ll have collected the same amount in benefits, regardless of whether I applied at 62, at 66, or at 70. Is this all correct?

No. The total amount you collect depends on your application age as well as on how long you’ll live. And actuarial tables show only average life expectancy. Current Social Security data say 65-year-old men and 65-year-old women, on average, can expect to live to 84.3 and 86.6 respectively — which means that half of them will live longer, and half won’t live as long.

Your benefit is permanently smaller if you take it at 62, bigger if you start at 66 — your full retirement age — and biggest if you wait until 70. The Social Security Administration says that on average, people who start before their full retirement age get the same lifetime benefits as those who start at their full retirement age. But again, that’s an average! (Their comparison doesn’t include data for people who start at 70.)

Finally, your “break-even” point isn’t constant. It depends on when you start Social Security. Say your benefit at 66 is \$1,000, for example. Taken early at 62, it’s \$750. If you start at 66, you miss \$36,000 of benefit payments, but your starting benefit is \$250 bigger. By age 74, your larger checks will make up for that missed \$36,000 and you’ll start coming out ahead — so in this example, 74 is your break-even point. (For simplicity’s sake, I’ve left out factors like annual inflation adjustments and tax rates, which complicate this calculation in real life.)

THE BOTTOM LINE The best age to take Social Security depends on many variables.