How long to break even if I delay Social Security?


Q. When discussing Social Security, nobody seems to mention that if you wait until age 70, it takes another seven years to make up the difference between the money you would have collected from age 62 to 70. This means you will be 77 before you’re ahead. Isn’t this true?
— Not collecting yet

A. You are correct.

And depending on the current interest rates and your age for claiming, it could be even older than that.

Choosing when to take Social Security should fit into your overall financial plan, said Jody D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown.

“Social Security is the primary source of funding for most American families, even more so for lower- and middle-class families,” she said,

Before deciding when to take your benefits, you should consider whether you have pensions or other assets that can support your retirement income and your overall health.

“Having a larger benefit that continues for an individual and their spouse for a lifetime can make a difference,” she said.

But the biggest challenges in retirement are longevity and inflation.

Social Security provides pension-like income and gives you a cost of living adjustment annually based on the CPI-W. The Social Security cost-of-living increase for 2012 is 2.8 percent, and is credited in the January payment each year.

D’Agostini said you will get delayed credits for each year that you defer claiming from age 62, which is the soonest you can claim, until age 70. After age 70, there are no more credits and so you should claim at that age.

“The credits that are awarded to your benefit are between 7 and 8 percent annually, which in this low interest rate environment is a very nice boost to your eventual benefit,” she said. “It can increase your benefit by 76 percent.”

But if you don’t expect to live long enough to take advantage of the higher payouts, starting benefits earlier could make more sense.

Email your questions to moc.p1582091219leHye1582091219noMJN1582091219@ksA1582091219.

This story was originally published Sept 11, 2019. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.