For many retirees, Social Security is one of the most important income decisions they will make.
The question is often framed:
Should I claim at 62, at full retirement age, or wait until 70?
A common way to answer that question is with a breakeven analysis. You compare the smaller benefit available earlier with the larger benefit available later and calculate how long you would need to live for delaying to pay off.
That can be useful.
But it is rarely enough.
The right Social Security strategy depends on more than one person’s life expectancy. For married couples especially, the decision can affect survivor income, portfolio withdrawals, taxes, and the amount of guaranteed income available later in retirement.
The Breakeven Age Is Only One Piece
Suppose you are deciding whether to claim Social Security now or wait several years for a larger benefit.
A breakeven calculation asks:
How long would I need to live for the larger delayed benefit to make up for the payments I gave up by waiting?
That is a reasonable starting point.
But it assumes the only thing that matters is the total amount of Social Security you personally receive.
In reality, several other parts of the financial plan may change depending on when you claim.
For example, if you delay Social Security, you may need to withdraw more from your investment portfolio in the meantime.
If you claim earlier, you may be able to leave more of that portfolio invested.
That creates a time-value-of-money question.
If investments perform well, keeping more money invested may make earlier claiming more attractive. If markets perform poorly, having delayed and secured a larger guaranteed Social Security benefit may look more valuable.
That does not mean claiming early or delaying is automatically better. Some rely more on strong market performance during retirement than others. And some have more of a risk of “outliving” their funds than others.
That means the decision should be evaluated alongside the portfolio and risk factors to the retirement plan, not separately from it.
Married Couples Have Another Layer to Consider
For married couples, Social Security is often a household decision rather than two separate individual decisions.
Consider a hypothetical couple, Marshall and Lily.
Marshall is 67 and was the higher earner. Lily is 64 and had lower lifetime earnings.
Suppose Marshall’s Social Security benefit at full retirement age is $3,500 per month and Lily’s is $2,100 per month.
If both wait until 70, those benefits could increase to approximately $4,340 and $2,604 per month, respectively.
Marshall might look at his own breakeven calculation and decide that waiting until 70 does not seem worthwhile if he is unsure that he will live long enough.
But that misses one of the most important parts of the analysis:
What happens to Lily if Marshall dies first?
Survivor Benefits Can Change the Calculation
If Marshall dies first, Lily may eventually be eligible for a survivor benefit based on Marshall’s record.
If Marshall claims at 67 and receives $3,500 per month, that amount can form the basis of Lily’s future survivor benefit.
If Marshall waits until 70 and increases his benefit to $4,340, the larger amount can also increase the survivor benefit potentially available to Lily.
So Marshall is not simply deciding between more money now and more money later for himself.
He may also be deciding how much guaranteed income Lily could have for the rest of her life after his death.
That can materially change the breakeven analysis.
A decision that appears unattractive based only on Marshall’s life expectancy may look very different once Lily’s potential survivor income is included.
The Higher Earner and Lower Earner May Have Different Strategies
The two spouses also may not have the same incentive to delay.
Marshall, as the higher earner, may have a stronger reason to wait because increasing his own benefit can also improve survivor protection for Lily.
Lily’s situation is different.
If her own benefit is $2,100 at full retirement age, waiting until 70 could increase it to approximately $2,604.
That increase may still be valuable.
But if Marshall has delayed to 70 and Lily eventually becomes entitled to a survivor benefit based on his $4,340 amount, her decision to wait on her own benefit does not increase that future survivor amount.
That means the couple may reasonably arrive at two different claiming ages.
The higher earner may benefit from delaying for longevity and survivor-protection reasons, while the lower earner may have less incentive to wait as long.
The key is that the decisions should be coordinated.
Taxes Matter
Social Security does not exist in a vacuum from the rest of your tax plan.
Depending on your income, a portion of Social Security benefits may be taxable.
Your claiming age can also interact with:
- IRA withdrawals
- Roth conversions
- Capital gains
- Employment income
- Required minimum distributions
- Medicare premiums
For example, delaying Social Security may create several lower-income years before benefits begin.
Those years may present opportunities for Roth conversions or other tax-planning strategies.
On the other hand, claiming earlier may reduce the amount you need to withdraw from investments.
Again, there is no universal answer.
The important point is that the Social Security decision can change the tax opportunities available elsewhere in the plan.
Longevity Still Matters — But Not Just Yours
Life expectancy is still a major part of the analysis.
But for married couples, it is not enough to ask how long one spouse expects to live.
You also need to consider:
- The age difference between spouses
- Each spouse’s health
- Family longevity
- Which spouse earned more
- Which spouse is more likely to outlive the other
- How much income the surviving spouse would need
A couple with a younger spouse and a large earnings difference may view delaying the higher earner’s benefit very differently from two spouses of the same age with similar earnings histories.
The Better Question
A breakeven calculation is useful because it gives you a clear numerical comparison.
The mistake is treating it as the answer.
Instead of asking only:
“At what age do I break even?”
A better question is:
“How does Social Security fit into the rest of my retirement plan?”
That means evaluating claiming age alongside survivor benefits, investment withdrawals, taxes, work income, health, longevity, and the needs of both spouses.
Social Security is not simply a decision about when to start receiving a check.
For many retirees, it is a decision about how to structure guaranteed income for the rest of their lives.
Van Nostrand Wealth Management is an independent, fee-only fiduciary wealth management firm helping families coordinate retirement, tax, investment, and estate-planning decisions.
Learn more at vnwealth.com.
This article is for educational purposes only and should not be considered individualized investment, tax, legal, or Social Security advice. Examples are hypothetical and may not reflect the rules or outcome applicable to any specific person.