It’s the question that virtually every retiree has: Is it better to claim your Social Security benefits early or wait? It’s a hard question to answer, in part because everyone’s situation can be drastically different, but also because of the serious downsides of outliving your income.

Unfortunately, many seniors are unprepared for this tough decision, and the Social Security Administration (SSA) and its representatives do a poor job — one expert says, “terrible” — of helping retirees decide when to claim their benefits.

Let’s run through some numbers, including a back-of-the-envelope analysis of when you could break even on Social Security, and why you might wait to claim your benefits until age 70.

When can you claim Social Security and what will you make?

The earliest you can claim Social Security benefits is age 62. In 2021, about 29 percent of newly retired workers claimed their retirement benefits at age 62, according to the Congressional Research Service. But you won’t get your full retirement benefit at that age, meaning that retirees are settling for a much smaller benefit in perpetuity rather than waiting for more.

But what’s the concrete cost of waiting for a larger paycheck? Quite a lot, actually.

You’ll receive your full benefit if you claim it at full retirement age (age 67 for those born in 1960 or later). And you’ll receive extra benefits if you don’t claim your check until age 70. After that, though, you won’t receive any bonus payout, so there’s no reason to wait past 70.

If you claim your benefits early, then you’ll lose five-ninths of 1 percent of your benefit each month for up to 36 months before normal retirement age. If you file more than 36 months early, you’ll lose another five-twelfths of 1 percent a month. So if your normal retirement age is 67 and you file at 62, you’ll lose 30 percent of your total benefit (that is, 36 x 5/9 + 24 x 5/12).

So if your full benefit were $1,000 a month at age 67, you’d receive just $700 at age 62. (Here’s the average Social Security check.)

In addition to incentivizing you to wait until your full retirement age to claim your benefit, Social Security also gives you an incentive to wait even longer. You’ll receive an additional 8 percent annually if you wait up to three additional years after full retirement age, if you were born in 1960 or later.

So if your full benefit were $1,000 a month at age 67, you’d receive $1,240 at age 70.

“The benefit is 77 percent higher, adjusted for inflation, at age 70 than it is at age 62,” says Laurence Kotlikoff, professor of economics at Boston University and co-author of “Get What’s Yours: The Secrets to Maxing Out Your Social Security.” “Social Security has a huge return for waiting.”

With those figures out of the way, let’s run through a basic analysis to see when it might make sense for the average person to claim their benefit. Then we’ll work through why it may not make sense for you or another individual to do what’s reasonable for the average person.

At what age do you break even on Social Security?

If you’re looking to maximize the amount that you withdraw from Social Security over your lifetime, you might consider doing a break-even analysis to see when it’s best to file. In other words, do you max out your lifetime take-home amount by claiming early and having more years of Social Security or by waiting (say, to age 70) and then claiming a much larger benefit?

For simplicity, let’s assume your full retirement benefit would be $1,000. We’ll also assume 2 percent annual increases in the benefit, applying that to both the actual paid benefit starting at age 62 as well as the accumulated benefit to be claimed later at age 70.

So at age 62, your first monthly benefit would be 30 percent lower than your full benefit, or $700 total. At age 70, your benefit would be $1,240 plus the cost-of-living adjustments in the interim.

Here’s how the numbers break down and a break-even age for claiming Social Security.

Age Annual benefit from age 62 Annual benefit from age 70 Cumulative benefit (age 62) Cumulative benefit (age 70)
Source: Social Security Administration
62 $8,400 $0 $8,400 $0
63 $8,568 $0 $16,968 $0
64 $8,739 $0 $25,707 $0
65 $8,914 $0 $34,622 $0
66 $9,092 $0 $43,714 $0
67 $9,274 $0 $52,988 $0
68 $9,460 $0 $62,448 $0
69 $9,649 $0 $72,097 $0
70 $9,842 $17,434 $81,939 $17,434
71 $10,039 $17,783 $91,978 $35,217
72 $10,240 $18,139 $102,217 $53,356
73 $10,444 $18,501 $112,662 $71,857
74 $10,653 $18,871 $123,315 $90,729
75 $10,866 $19,249 $134,181 $109,978
76 $11,084 $19,634 $145,265 $129,611
77 $11,305 $20,027 $156,570 $149,638
78 $11,531 $20,427 $168,101 $170,065
79 $11,762 $20,836 $179,863 $190,901
80 $11,997 $21,252 $191,861 $212,153

Somewhere near age 78, the later filer overtakes the younger filer in total money taken from Social Security. From there, as you can see, the later filer is taking out at least $9,000 annually more than the earlier filer, or at least another $750 a month.

Run this analysis out to age 90 for both groups, and you’ll see that the later filer accumulates more than $103,000 extra from age 80 to 90 — more than $10,000 each year. In total, this late filer receives about $123,659 more than the early filer by age 90. Of course, if your benefit check were twice this hypothetical starting amount, or $2,000, you would receive twice the lifetime benefits, too, with these assumptions baked in.

Clearly, if you plan to live a long time — few people plan otherwise — waiting to file is the better option, all else equal. The rub is whether a person lives long enough to collect that extra money. So let’s look at the average life expectancy for someone at age 62 and age 70.

According to the U.S. Census Bureau, the life expectancy of a man at age 62 is to live for about 21 more years, a total lifetime of 83 years. For a 70-year-old man, life expectancy is about 15 more years, so a total lifetime of 85 years. Of course, the older you get, the longer your expected life. For women, life expectancy is about 2.8 and 2.2 more years, respectively.

A break-even analysis suggests that later filers will start to take more total earnings than early filers at age 78 or so. But these groups are expected to live quite a bit longer than that, and so should prefer to file at age 70 and take more money over their lifetime. Yet, according to Social Security data, in 2021 just 9.6 percent of new retired workers filed at age 70 or later.

Is it crazy for so many retirees to file so early? No. If only for the simple reason that we’re not all the average person. But there are other reasons, too.

Top reasons to start your Social Security benefits early

Americans have several good reasons to file for benefits early, but most would be much better served by waiting until age 70, Kotlikoff says.

“For 85 percent of Americans filing at age 70 is the best option,” he says, but just a small handful are. “Some Americans need to start earlier for cash flow reasons or other reasons.”

Here are some reasons that Americans may consider filing early for retirement.

You need the cash flow now

The state of Americans’ retirement finances is poor, to say the least. A recent Bankrate survey revealed that 56 percent of U.S. workers say their retirement savings are behind where they need to be.

For many, waiting longer for the extra cash flow from Social Security is a hard choice to make, especially if you have bills to pay now. Here’s how to estimate your Social Security benefits.

You don’t expect to live for much longer

Many Americans may claim Social Security early because they simply don’t expect to live that long, for whatever reason. Although an American man’s life expectancy at age 62 is projected for another 21 years according to the Census Bureau, many won’t reach that age. So, it can be a rational choice to claim your benefits early.

You’re not interested in maxing out your benefit

Many retirees may be uninterested in maxing out their lifetime benefits, given the uncertainties of health and aging. They’re alive and able to enjoy life, so they want the money to do so now, not years later. Many may also want to escape the drudgery of the workday world and enjoy the relaxation of retirement — and Social Security helps them do that now. Or they may experience a lay off and find it difficult to land another job, so they choose to claim Social Security early instead. Others may have plans to travel, see family or pursue other pastimes that they’ve had to neglect during their lives.

You have a special situation

“There are 13 benefits through Social Security, and most people know about the retirement benefit but not the other 12,” Kotlikoff says.

Social Security offers a range of benefits to those in many different situations, including the disabled, ex-spouses, surviving spouses, minors, as well as retirees. That’s why a simple break-even analysis like the one above is too narrow to provide real guidance. It’s illustrative rather than prescriptive, offering a basic scenario that probably won’t apply to most people.

Because of this range of benefits, you must craft a plan that fits your needs. Kotlikoff advises would-be filers to consider their situation and to be careful when speaking with Social Security personnel who, he says, may often give you poor advice that’s not tailored to your situation.

“They do offer advice, and it’s almost uniformly bad advice,” he says.

Top reasons to wait until age 70 to claim Social Security benefits

Just a fraction of retirees wait until age 70 to claim their Social Security benefit, which is fattened 24 percent above their full retirement benefit.

What are some reasons Americans should consider waiting longer to get their benefit?

You expect to exceed the average lifespan

A break-even analysis might help frame your decision, but no person is the average person.

“The whole idea of breakeven is to play the average,” Kotlikoff says.

There’s good reason to believe that you’ll live longer than the break-even time, giving you more money later and for the rest of your life, too.

You don’t want to outlive your money

Citing figures from Social Security, the Bipartisan Policy Center says, “15 percent of 62-year-old men will reach [age] 92” and “14 percent of 62-year-old women will live to at least 95.” The center adds: “If a beneficiary claims early and outlives other assets, they may have to survive on only their reduced monthly benefit for the rest of their lives.”

Outliving your money is one of the biggest dangers for those with poor retirement finances. You could end up with severely constrained cash flow and have little or nothing you can do about it.

“Look at the worst-case scenario and play it safe,” Kotlikoff says.

You want to maximize your Social Security payout

If you’re set on getting the highest amount of money from Social Security — you probably paid into it for decades, after all — then filing later makes that more likely. Of course, it’s no guarantee that you will, but you’re maxing it out every year you withdraw money past the break-even point.

Naturally, if you don’t expect to live a long time, you’ll max out if you file earlier. But the actual answer to this question will play out only in the fullness of time.

You earn more than your spouse

In some cases, one spouse might choose to claim Social Security benefits early, while the other waits until age 70 to claim their benefits. This strategy can provide some immediate cash flow while the other spouse’s prospective payments get bigger.

For example, if one spouse has a significantly higher lifetime earnings record, it might make sense for that individual to delay benefits in order to maximize the eventual payout. The spouse with the lower earnings record, meanwhile, could claim benefits earlier to provide some fixed income in the interim. This approach not only maximizes the higher earner’s benefit — and thus the survivor’s benefit for the lower earning spouse — but it also allows the couple to take advantage of some income earlier in retirement.

Bottom line

Finding the right age to take Social Security is a complex task, even with good information. It gets even more complicated — and touchy — when retirees have to consider their own longevity in making a decision. But it’s also important to factor in other issues such as taxes and other sources of income, both of which could change when you decide to take Social Security.

So if you want to max out your benefit, it’s vital to work with an advisor specializing in these kinds of knotty questions. You could quickly earn back the advisor’s fee with the right decision.