Weekend Reading: Should You Delay Taking Social Security Benefits?

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
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Your ideal Social Security filing strategy will depend on a variety of factors, including time horizon and discount rate used in calculations. However, to help you simplify your decision, two primary methods that can be leveraged include breakeven analysis and present-value calculations.


Breakeven vs. present-value: Breakeven analysis involves determining the age at which your total benefits received surpass the amount received if you delay claiming. It suggests that claiming at age 67 is often the best choice for 62-year-old males, but it doesn't consider components like the time value of money, the insurance aspect of Social Security and variations in life expectancies.

Present-value calculations factor in your time value of money and consider a longer time horizon, such as age 100. These calculations tend to favor delaying claiming to prioritize future payments over immediate ones. However, your recommended claiming age can change based on the chosen time horizon and discount rate.

Before you determine the best strategy for Social Security, it’s important to understand the fundamentals. If you need the money, use the break-even analysis. If you have other assets, use the present-value calculation. Just remember: This is your starting point, not the finish line.