Key Takeaways
- Delaying Social Security boosts your monthly benefit, but serious illness may make early claiming a more practical option.
- Calculating your breakeven age can help you decide whether delaying benefits or collecting early makes sense.
- If an illness shortens your expected lifespan, claiming earlier can help ensure you collect more in lifetime benefits and that money can be used for more immediate medical needs.
Waiting to collect Social Security retirement benefits can provide a big boost to your retirement income, but if you have a serious illness, is it really worth the wait?
We connected with Chuck Czajka—a certified Social Security claiming strategist and founder of Macro Money Concepts—to discuss when people who are suffering with chronic or acute medical conditions should consider delaying Social Security.
Collecting Early Means Missing Out On Larger Benefits
The earliest age to claim Social Security retirement benefits is 62, but if you collect early, you’ll receive a reduced benefit.
By waiting until full retirement age—or age 67 for those born after 1960—you’ll receive your full benefit. However, if you’re willing to wait even longer, your monthly benefit will grow larger. For every year after FRA that you delay receiving benefits, you’ll get an 8% boost in benefits up until age 70.
For example, if you begin collecting retirement benefits at age 62, you could be looking at up to 30% less each month for the rest of your life.
Calculate Your Breakeven Age To Understand When To Collect
You should also consider calculating your breakeven age, which is the age at which your lifetime benefits from delaying and collecting larger benefits exceed the value of collecting early and receiving smaller benefits.
“The average breakeven calculations usually bring [are at] ages 76 and 78,” Czajka said. “I would base my decision on my mortality, current income needs, and beneficiaries.”
So if you’re dealing with an illness or chronic condition that reduces your life expectancy, you can compare your projected life expectancy to your breakeven age to help you determine when to collect. If you don’t expect to live past your breakeven age, you might be better off collecting earlier.
On the other hand, if you’re healthy and come from a family with long lifespans, you’ll probably make more money in the long run by waiting.
You can find online calculators to help you figure out your breakeven age.
The Bottom Line
Ultimately, if you’re sick and old enough to qualify for benefits, the most important question you should ask yourself is ‘could this illness be life-threatening?’, according to Czajka.
“If the answer is yes, I would probably advise the person to take the Social Security benefit now,” Czajka says. “The extra money could be used to help keep you alive or pay for various other medical treatments.”
Furthermore, if you have a lower life expectancy due to your condition, collecting early will allow you to collect benefits for longer, which is especially important if you don’t think you’ll live until you reach breakeven age.
However, for those who have medical conditions but still expect to live long lives, claiming later could be a better bet, as the longer you wait to receive Social Security, the higher the monthly benefit.