Social Security retirement benefits are primarily based on two factors: your average income over your working life and your age when you claim them. You get to decide when to start collecting benefits, within an eight-year window from age 62 to age 70. The longer you wait, the higher your monthly payment will be.
That means choosing when to file for Social Security is in part a decision between collecting a smaller benefit for a longer period and starting later but getting a bigger monthly payment. If you live long enough, the cumulative benefits from the later, higher start will eventually catch up with the sum of reduced payments you can start drawing earlier.
That catch-up moment is called the break-even age (or break-even point), at which the dollar value of claiming benefits later surpasses the value of taking them early. Determining your break-even point and weighing it alongside other factors such as your physical and financial health can help you decide when to start Social Security and get the most out of your benefits over your lifetime.
How age affects benefits
You become eligible to collect your full retirement benefit — 100 percent of the amount you’re entitled to receive based on your lifetime earnings history — at full retirement age (FRA), which is 66 and 6 months for people born in 1957 and will gradually rise to 67 for those born in 1960 and later.
The minimum age to begin benefits is 62, but Social Security reduces your monthly payment by a fraction of a percent for each month before the FRA that you claim. Someone born in 1961 who starts benefits in 2023 will get as little as 70 percent of their full monthly benefit. That reduction is permanent.
If you put off claiming benefits until after full retirement age, Social Security bumps up your prospective payment for each month of delay. That 1961 baby would get 124 percent of their full retirement benefit, for life, by waiting until their 70th birthday to start Social Security.
Why do benefits increase if you wait past 62? Because Social Security works by the principle that over the course of a retirement, you should receive the same total amount regardless of the age at which you start benefits. Monthly payment levels are calculated so that if you file for reduced benefits at 62, you will receive the same total amount as if you start at 70, or at any age in between, if you live to an average life expectancy.