Beyond Full Retirement Age: Determining Your Social Security Payouts

For many years, age 65 was synonymous with retirement for Americans, as it marked the age at which you could begin receiving full Social Security benefits. However, in 1983, Congress enacted legislation to gradually increase the full retirement age (FRA) to 67.¹ This change aimed to reflect longer life expectancies and help preserve Social Security funds. As of 2025, the FRA is now 67 for those born in 1960 or later. Therefore, if you turn age 65 in 2025, you must wait until 2027 to reach your FRA and receive 100% of your earned benefits.

Understanding your FRA is crucial because the timing of when you start taking Social Security benefits significantly impacts your payout. The difference in benefits between claiming early at age 62, at your FRA of 67, or delaying until age 70 can be substantial. For instance, when the FRA was 65, taking benefits at age 62 resulted in a 20% reduction.² Now that the FRA is age 67, claiming Social Security at age 62 results in a 30% drop in payout amount.

Delaying Social Security until age 70, instead of taking it as soon as you reach your FRA and retire, may potentially offer financial benefits. Your benefit amount increases annually by 8% between FRA of 67 and age 70. However, several other aspects, including your desired income, amount of assets, marital status, legacy wishes, and more, should be factored into this decision. A solid financial plan would help with having a full picture for determining your options.

In this article, we’ll explore how delaying Social Security benefits right away when you retire can make a difference in how much money you’ll have for the rest of your retired life and whether this choice might be right for you.

Hypothetical scenario

Don is a fictional individual who wants to retire at age 65. He is single and healthy with a relatively high amount in retirement savings and other investment accounts and will need $8,000 per month in income to maintain his lifestyle. If he delays taking Social Security benefits until age 70, he might use up more of his assets (such as retirement savings) in the first five years, potentially resulting in a lower balance and smaller investment gains for the rest of his retirement years. So while it’s true Don can receive higher Social Security benefits if he lives past his break-even point of age 80, there’s the negative impact on assets to consider.

Which option is better for his situation, taking benefits right away or waiting?

This is a unique decision those who have been good savers must face in retirement. If Don had saved a relatively low amount of assets and had a normal life expectancy, it would more likely be advantageous for him to wait until age 70 to take Social Security. However, since he has more assets which are capable of generating compounded growth and interest, claiming Social Security at age 65 might help slow the drawdown of those assets, thereby preserving his wealth in his earlier retirement years.

Break-even point for Social Security

When thinking about what age to take Social Security, it’s good to know your estimated break-even point — which is when claiming benefits either earlier or later will have the same total payout.³ Also note that, in addition to your age, your Social Security benefits are based on lifetime earnings.

For instance, let’s say Don’s monthly benefit as an individual retiree is expected to be $3,000 when he retires at age 65. According to a Social Security Administration (SSA) calculator, the break-even point for Don would be at age 80, where the total benefit of taking Social Security at either age 65 or age 70 would amount to approximately $550,000 (based on an average annual cost of living increase of 2.5%).⁴

However, this is only the break-even point when looking at Social Security in a vacuum. When considering Don’s entire retirement situation, including all of his assets, income needs, goals, and assumptions, his break-even age could be much later. Looking at the whole picture, it might still make sense for Don to wait until age 70 to file for Social Security. But since he has a substantial amount of retirement savings, it’s crucial to evaluate the entire scenario to determine the optimal timing for his specific situation.

Additional considerations

There are additional considerations beyond maximizing Social Security income and overall retirement income when conducting this type of analysis. For instance, if you are married and have the higher benefit, your spouse would be entitled to a survivor benefit based on your Social Security amount should you predecease them. Delaying the claim of Social Security could potentially increase your spouse’s benefit.

From a federal standpoint, depending on your overall situation, your Social Security benefits may be taxed as much as 85% of your income or not at all. Therefore, the optimal time to file for Social Security could be influenced by your overall retirement income plan from a tax perspective.

Learn more

Don’s scenario, along with the explanations of break-point ages and investment account growth, is purely hypothetical. Each person has a unique financial situation that includes aspects affecting the timing of taking Social Security benefits. However, being informed and understanding the complex calculations involved in claiming Social Security benefits can help with making the right decisions and achieving financial success in retirement. If you want to delve deeper into Social Security scenarios, connect with your Mercer Advisors wealth advisor.

If you’re not a Mercer Advisors client and want to learn more, including whether the Social Security Trust Fund will be there for you when you retire, let’s talk. Or, if you would like more information on Social Security, consider reading:

• How the Social Security Fairness Act Could Affect Your Benefits
• Cracking the Code: mastering Social Security Spousal Benefits
• 4 Tax Strategies for Maximizing Social Security Benefit

¹“Social Security: Turning 65? You’ll have to wait longer for full benefits.” USA Today, 26 Feb. 2025.
²“Claiming Social Security at 62: How Filing Ages Have Changed.” Social Security Intelligence, 28 Feb. 2025.
³“What Is the Break-Even Age for Social Security?” AARP, 23 Dec. 2024.
⁴“Break Even Calculator” Social Security Intelligence, 28 Feb. 2025.

Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. The hypothetical example above is for illustrative purposes only. Client experiences will vary, successful outcomes are not guaranteed.

For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.

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