Social Security is the biggest source of income for most retirees. Roughly half of American households with someone age 65 or older receive at least 50% of their annual income from Social Security, according to data collected by the Social Security Administration. So, maximizing that income source may be one of the most valuable retirement strategies.
If you want to ensure you receive the maximum amount possible from Social Security during your lifetime, it's simple. You just need to know how much longer you'll live. But assuming your crystal ball is broken, you can use the next best thing: life expectancy projections from the CDC.
The most recent update from the CDC provides data that clearly favors a specific claiming age for the average retiree. Here's exactly who should follow it and when you should make exceptions.
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When to claim to maximize Social Security benefits
Before we get into the exact age to claim benefits for the average retiree, it's important to understand how claiming age affects the amount you receive each month and over your lifetime.
Most people become eligible for Social Security retirement benefits starting at age 62. However, claiming that early results in a smaller monthly benefit than waiting would.
The Social Security Administration determines your monthly benefit by first determining your primary insurance amount, which is the benefit you'd receive if you start benefits the month you reach full retirement age. For readers born in 1960 or later, that's 67 years old, but it will range between 66 and 67 for anyone born between 1955 and 1959. Those born earlier already reached full retirement age at 66.
The Social Security Administration reduces your benefit by a percentage of your primary insurance amount for each month you claim Social Security before reaching full retirement age. On the other hand, it'll increase your monthly benefit for each month you delay benefits beyond your full retirement age, up until age 70.
The program was designed so that individuals will receive about the same amount in lifetime benefits no matter at what age they started Social Security. However, improvements in medicine and healthcare have gradually extended the average life expectancy. That's why it's important to understand the concept of a break-even age.
The breakeven age for Social Security is the age you'd have to live to for the decision to delay Social Security to result in receiving more in lifetime benefits from the program. For example, someone trying to decide between claiming as soon as possible and waiting until their full retirement age at 67 would have to live until age 78 and eight months to break even on the decision, in terms of greater cumulative payments in their lifetime.
Retirees looking to maximize their lifetime benefits should use their life expectancy to determine the best age for them to claim Social Security.
The latest update from the CDC provides excellent guidance
The CDC released the latest update to its life expectancy estimates based on 2024 data last month, showing continued improvements in longevity. The average 65-year-old is now expected to live a few months longer, averaging another 19.7 years, up from 19.5 years based on 2023 data. That puts the average life expectancy at age 65 well beyond the break-even age for delaying benefits a few more years.
But you can claim benefits any month, so each month you decide not to start Social Security is technically a decision. For the most part, each month you delay requires you to live a little bit longer to break even. So delaying benefits from full retirement age to full retirement age plus one month requires you to live a bit longer, and the decision to delay benefits another month after that requires you to live a little bit longer still. The ultimate decision is whether to delay benefits from age 69 and 11 months to age 70. The breakeven age for that decision is about 85 1/2 years old.
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While the latest CDC memo doesn't provide life expectancy for 70-year-olds, the 2023 data showed that the average 70-year-old can expect to live another 15.9 years, putting them just beyond the break-even age for delaying all the way until age 70. And considering the improvements in life expectancy over the past year, the average 70-year-old can now be expected to live to their 86th birthday. It's worth noting that women's life expectancy is significantly higher than men's. The data also shows Hispanic and Asian people living longer than average, and American Indian men living longer than the average male.
The CDC data doesn't show the average male living long enough to delay until age 70, but it's very close. And considering that the constant improvement in medicine and healthcare leads to longer and longer lives, it'll likely reach the necessary level by the time you reach old age.
If you were the high earner in your household, it likely makes even more sense to wait until age 70, especially if your spouse is the same age or younger. Your spouse will receive survivor benefits based on the amount you received prior to passing, which significantly tilts the breakeven calculation toward delaying until age 70, since you should account for both your and your spouse's life expectancies.
Who should ignore the CDC data?
While it's important to know what the average life expectancy data says, it's just as important to know when to ignore the data.
First and foremost, if you have a chronic health issue or can otherwise reasonably expect to pass away earlier than average, it may be worth claiming benefits earlier. Likewise, if you need Social Security income to make your retirement plan work and you're unable to generate income any other way, it might make sense to claim benefits before age 70.
Another group that might benefit from ignoring the traditional breakeven calculation is lower-earning spouses. If you expect to claim spousal benefits, the amount you can receive based on your partner's earning record maxes out when you reach full retirement age. Delaying Social Security past that age rarely makes sense, even if your spouse is delaying benefits a few more years and you only qualify for a small amount in the meantime.
Couples may also take the approach of the low-earning spouse claiming benefits as soon as possible while the high-earning spouse waits until age 70. That could maximize total household benefits received over the expected lifetime of the longest-living partner, thanks to survivor benefits.
In simple cases where you're claiming your individual benefits, though, the data all points to waiting until age 70 to start Social Security if you can.
