A break-even point in the context of Social Security retirement benefits refers to the age at which the total lifetime benefits received from claiming early versus waiting until full retirement age become roughly equal.
For example, if an individual is eligible for a monthly Social Security benefit of $1,500 at their full retirement age of 67, they could choose to begin receiving benefits at age 62, which would result in a reduced monthly benefit of $1,050. By starting early, the individual would receive benefits for a longer period of time but at a reduced rate, while waiting until full retirement age would result in a higher monthly benefit but a shorter period of time to receive benefits.
The break-even age in this scenario would be around age 80. This means that if the individual lives past age 80, they would receive more lifetime benefits by waiting until full retirement age to claim benefits. However, if they do not live past age 80, they would have received more lifetime benefits by claiming early.
It’s important to note that the break-even point is not a guarantee, as it is based on several assumptions, such as life expectancy and future Social Security benefit increases. Therefore, it’s important for individuals to consider their own financial and personal circumstances when deciding when to claim Social Security retirement benefits. Consulting with a financial advisor or using online retirement planning tools can help individuals make informed decisions about their retirement planning strategies.