There’s a premise that financial planners in the United States frequently repeat: those who postpone collecting Social Security until age 70 maximize their lifetime monthly benefit. The numbers support this.
However, that same logic reverses when the beneficiary’s health reduces their life expectancy below certain thresholds. In those cases, waiting can mean losing money that will never be received.
Retirement 62 vs. 67 vs. 70: The Math Behind Your Money
The federal retirement system stipulates that workers can access their benefits as early as age 62, though with a permanent penalty. The full retirement age—known as Full Retirement Age or FRA—is currently 67 for those born in 1960 or later.
Claiming benefits earlier results in a 30% reduction in the monthly benefit. Delaying payments beyond age 67 generates an 8% increase for each additional year, up to a maximum of 70 years, at which point the payment is equivalent to 124% of the base benefit.
The decision of when to apply for benefits is not uniform. It depends on factors including other sources of income, earnings history recorded with the Social Security Administration (SSA), and, crucially, the applicant’s health.
The Break-Even Age: The Math Advisors Use to Pick Between 62 and 70
The tool advisors use to assess the optimal time to file a pension claim is called the break-even age. This is the age at which the total accumulated early pension payments equals the total that would have been received by waiting longer for larger payments.
Someone who files at age 62 instead of 67 starts with smaller checks but over a longer period, and this accumulated benefit is depleted around age 79. If the comparison is made between ages 62 and 70, the advantage of early pension withdrawal disappears between ages 80 and 81.
For a beneficiary in good health with a family history of longevity, those ages are achievable. For someone suffering from a serious chronic illness or who has received a diagnosis that compromises their life expectancy, those same thresholds become unattainable. In that scenario, the calculation is completely reversed.
The life expectancy projected by the SSA for a 62-year-old man is approximately 83.6 years; for a woman of the same age, around 86.5 years. These averages do not reflect the situation of those with medical conditions that deviate from this statistical average.
What the Break-Even Calculator Forgets to Tell You
For someone with a realistic life expectancy of 75 years or less, claiming early retirement benefits is almost always more advantageous in terms of the total amount received over their lifetime. Advisor Noah Damsky of Marina Wealth Advisors added another dimension to the analysis: “It provides peace of mind, money in your pocket, and a return on the investment of decades of work. We like getting paid early, even if it means leaving some money on the table down the road.”
This argument introduces a consideration that actuarial models don’t capture: the subjective value of money available now versus larger payments in an uncertain future. For someone with a life-threatening diagnosis, this difference has real weight.
The Healthcare Costs in your Golden Years
Medical costs in retirement exacerbate the situation. The monthly Medicare Part B premium—health insurance—starts at a minimum of $202.90. Part A, which covers hospitalization, includes a $1,736 deductible for each hospital stay.
Hospital stays exceeding 60 days incur additional charges that quickly add up. For a retiree with chronic conditions, these expenses become part of the overall financial calculation.
More than 90% of eligible individuals would benefit, mathematically speaking, from waiting until age 70 to begin receiving benefits, according to data from the National Bureau of Economic Research published in 2022.
However, only 10% of those who qualify for the system actually do so. 44% apply for benefits before reaching FRA, according to a survey of 1,500 adults conducted by the investment firm Schroders.
