The potential benefits associated with delayed claiming of Social Security retirement benefits are widely covered in the financial press. This piece provides information about the “breakeven return” for various Social Security claiming ages and longevity planning horizons at which an individual would be indifferent between early and delayed claiming. If a retiree can earn a higher return than the breakeven return, claiming earlier would generally be considered better. The breakeven returns are nominal geometric returns, meaning they are the realized returns that include inflation and the impact of volatility, and are net of fees.

The analysis suggests that, for common longevity planning ages (95+), the required breakeven return exceeds 9% for a single individual and is likely closer to 10% for a married couple. While it may theoretically be possible to outperform delayed claiming (e.g., if the portfolio earns more than 9% per year), doing so would likely require a meaningful amount of risk, whereas Social Security retirement benefits are generally considered to be risk-free. The breakeven returns for delayed claiming are notably higher than the approximately 6% return for a life-only single premium annuity (SPIA), which suggests delayed claiming should likely be considered for retirees before annuitizing wealth.

On balance, this piece is broadly consistent with other research on the topic, suggesting that delayed claiming of Social Security retirement benefits can be an especially attractive way to generate retirement income for those focused on longevity risk.