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Compare the lifetime value of claiming benefits early and investing them with waiting for larger monthly benefits.
Claiming early gives you smaller monthly payments that you can invest immediately. Waiting can increase your monthly benefit, but you miss out on years of payments and potential investment growth. This calculator estimates the crossover age where waiting becomes more valuable than claiming early and investing.
The opportunity cost is the money you could have received by claiming early, plus the potential investment returns you could have earned if you invested those early payments.
If you expect high market returns, taking benefits early and investing them can sometimes outperform waiting for a larger benefit. However, waiting provides a guaranteed, inflation-adjusted increase without market risk.
The crossover age is the point at which the total lifetime value of waiting to claim overtakes the total lifetime value of claiming early and investing. If you live past this age, waiting was the better financial choice.