Social Security claiming age: the break-even maths
Break-even charts answer the wrong question for married couples. Here is the one that matters.
By Meg Quillen, Cedar Landing Benefits
Claim early and you get less each month for longer. Claim late and you get more each month for fewer years. The break-even point — where cumulative totals cross — usually lands somewhere in the early eighties.
For a single person that chart is most of the decision. For a couple it is barely half of it.
Why couples are different
When one spouse dies, the household keeps the larger of the two benefits, not both. Delaying the higher earner's claim therefore raises the payment for whichever spouse lives longer, which is a form of longevity insurance rather than a bet.
That is why we often suggest the lower earner claims earlier and the higher earner waits, in households where the cash flow allows it.
What else belongs in the decision
Health and family history. Whether you intend to keep working, because the earnings test applies before full retirement age. How much of the benefit will be taxable given your other income. And whether a large withdrawal or conversion this year could raise Medicare premiums two years from now.
None of those appear on a break-even chart, and each of them can outweigh it.
A sensible default
For a healthy married couple with other resources, delaying the higher earner toward seventy is frequently the strongest single move available. For a single person in poor health with no other income, claiming early is often exactly right.
Most households are somewhere in between, which is why it is worth an hour with someone who will do the arithmetic on your figures.
An estimate for planning, not a quote. Medicare and the Marketplace set your real figures.
Have a question this raised?
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