The Social Security Administration recently announced a 2.8% Cost-of-Living Adjustment (COLA) for 2026, providing beneficiaries with a modest increase in their monthly checks to help offset inflation. While annual COLA adjustments are designed to preserve your purchasing power, the timing of when you start receiving benefits often has a far greater impact on your lifetime income than any single year’s adjustment.
Why Timing Matters
When to begin taking Social Security is one of the most important—and personal—decisions in retirement planning. Claiming early means you’ll receive smaller checks for a longer period of time. Waiting to claim means you’ll collect fewer checks, but they’ll be larger. The trade-off between these two choices is where the concept of a “break-even” point becomes useful.
A Simple Way to Think About It
Think of two runners starting a race. The first runner gets a head start but moves at a steady pace. The second starts later but runs faster. Over time, the second runner will eventually catch up—and possibly pull ahead. That moment of catching up represents the break-even point.
Social Security works similarly. Claiming early gives you a head start on collecting payments, while delaying increases your monthly benefit. The break-even is simply the point at which the total amount you’ve received from delaying begins to surpass what you would have collected by starting earlier. If you live long enough, delaying can yield a larger lifetime benefit. If you don’t, starting earlier may result in more total income.
It’s Not Just About the Math
While the math behind break-even analysis is helpful, it’s only one part of the decision. Your health, family longevity, other income sources, tax situation, and lifestyle goals all matter. Some retirees value having more income early in retirement to enjoy travel and family experiences, while others prioritize maximizing lifetime benefits and survivor protection.
Finding What Fits Your Plan
There’s no universal “right” age to claim Social Security. The best choice depends on your broader financial plan and how Social Security fits into your long-term income strategy. Understanding the concept of break-even helps you make a more informed decision—but personal factors ultimately determine what makes sense for you.
We’re happy to model different claiming strategies, show how they interact with your overall retirement plan, and help you find the balance between income timing, longevity protection, and peace of mind.
