How Do I Calculate My Social Security Breakeven Age?

Your Social Safety break-even age might help you determine whether or not it is higher to begin amassing Social Safety early or wait till later when you possibly can obtain a bigger month-to-month cost. It is the purpose at which the worth of ready to begin taking Social Safety advantages catches up with and surpasses the worth of taking them early. Realizing it may enable you decide the optimum age to begin taking advantages.

The Social Safety Administration gives a calculator to assist work out your break-even age. We’ll stroll you thru the way it works and the way it might help you resolve when to begin amassing.

Key Takeaways

  • Deciding at what age to begin taking Social Safety earnings generally is a difficult query.
  • Begin too early, and also you’ll be taking in smaller checks every month, probably leaving cash on the desk.
  • Begin too late, and also you’ll get bigger funds, however they may come over a shorter period of time.
  • Calculating the best breakeven age for advantages is a helpful means to make sure that you stability funds versus longevity.

When to Take Social Safety Advantages

You possibly can elect to obtain Social Safety advantages beginning at age 62 or as late as age 70, although your full retirement age (FRA) (the age at which you are eligible for full advantages) depends upon the yr once you had been born.

For instance, your FRA is 67 if you happen to had been born in 1960 or later. When you elect to take your profit earlier than then, your month-to-month Social Safety cost will likely be diminished by 30%. Though the whole variety of funds you obtain will likely be greater than if you happen to had waited till your FRA, your complete lifetime Social Safety earnings may very well be decrease.

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If you attain your FRA, you obtain a full profit based mostly on the quantity of Social Safety tax paid into the system by your lifetime, as much as a most month-to-month profit quantity. Though fewer complete checks are acquired, your complete lifetime payout could also be greater. All of it depends upon how lengthy you reside.

Those that are capable of defer taking Social Safety earnings till after their FRA are given a delayed retirement credit score annually previous that age till age 70, equal to an annual 8% improve for individuals born in 1943 or later. Ready till age 70 leads to the fewest variety of checks acquired, however delivers a a lot greater month-to-month profit.

To find out probably the most applicable age so that you can begin taking advantages, you’ll want to calculate your Social Safety breakeven age.

If you elect to take advantages early, you make a everlasting selection—that means that your advantages are diminished over the course of your lifetime, not simply till your FRA.

The way to Calculate the Social Safety Breakeven Age

Your Social Safety breakeven age is the purpose in your life when the whole of these decrease profit funds involves equal the whole of advantages that you’d have acquired if you happen to had waited to take your advantages at FRA, and even later.

For instance, if you happen to had been born in 1961, your FRA is 67. When you select to start receiving Social Safety earnings at age 62 in 2023, then your FRA profit will likely be diminished by 30%. Assuming that the complete month-to-month profit could be $1,000, you may be left with a month-to-month Social Safety verify of solely $700.

If a co-worker with the identical delivery date and comparable earnings historical past elects to obtain their profit at FRA 5 years later, then their profit will likely be $1,000 every month. For the primary 5 years, you obtain a complete of $42,000 (or $8,400 per yr), whereas your co-worker receives nothing, so you might be forward. As soon as your co-worker begins receiving advantages, nevertheless, they get $300 extra every month—or $3,600 extra annually—than you do. So when will your co-worker catch as much as you in complete advantages?

Let’s divide the quantity by which you might be forward by the upper quantity per yr that your co-worker receives. The reply is when you’re each 78 years and eight months, or 11.67 years ($42,000 ÷ $3,600) after your FRA. After this level, your co-worker will earn extra over their lifetime than you’ll.

The Social Safety Administration has a number of calculators that can assist you estimate your advantages. Its Early or Late Retirement calculator reveals how ready longer to say retirement advantages will considerably increase the greenback quantity of your checks.

When Is Full Retirement Age (FRA)?

Full retirement age (FRA) is the age at which you develop into eligible to obtain full advantages from Social Safety. For these born wherever between 1943 and 1954, it’s age 66. When you had been born in 1955, it’s 66 years and two months, and it progressively will increase to 67 for these born in 1960 and after.

How Do I Qualify for Social Safety Retirement Advantages?

To qualify for Social Safety retirement advantages, you should be at the least 62 years outdated and have paid Social Safety taxes for 10 years or extra. Ready to gather Social Safety, as much as age 70, will end in greater month-to-month advantages.

How Do I Apply for Social Safety Advantages?

Go to your native Social Safety Administration (SSA) workplace, apply on-line at, or name 1-800-772-1213 to say advantages. You possibly can apply for Social Safety as much as 4 months earlier than you need your advantages to start.

The Backside Line

After all, the breakeven age will range based mostly on an individual’s FRA and the way a lot their advantages are diminished by how early they select to take their advantages. As well as, there are different components that have an effect on once you take retirement over which you will have no management, akin to prolonged unemployment or needing to take care of an in poor health partner, mother or father, or youngster.

Nonetheless, if you happen to assume that you’re prone to dwell previous your breakeven age, it’s most likely higher to defer taking Social Safety advantages till your FRA or longer. If you’re undecided that you’re prone to make it that far, then beginning advantages early makes extra sense.

Advisor Perception

Thomas Mingone, ChFC, CLU, AEP, CFS, RICP,founder and managing associate, Capital Administration Group of New York, Pearl River, NY.

Social Safety payouts are designed to be actuarially equal for somebody with common mortality, so, theoretically, it shouldn’t make a distinction when a person begins amassing. Nonetheless, the breakeven age—the age when complete Social Safety earnings from two retirement choices is similar—might be good to know, as exterior components might have an effect on the precise price of advantages acquired.

These embody inflation as measured by annual cost-of-living will increase, the time worth of cash, possible funding returns, and marginal tax charges. On-line calculators can supply a very good place to begin for estimating these variables. Nonetheless, do not forget that private components additionally have an effect on the choice of when to file—well being, familial wants, employment standing—and a breakeven evaluation can’t seize these.