![]() You may want to retire early due to health concerns, or you may need to continue to be employed in order to keep your health insurance. Make sure to consider the cost to your heath as well as your checkbook. Beyond the Social Security Break-Even Math: Other Factors That MatterĪs I mentioned before, calculating your Social Security break-even age can help you decide when to take your benefit, but I strongly suggest you consider other factors, including but not necessarily limited to the following: It would not be until that age that Joe would begin to come out ahead. That’s 11 years and eight months beyond his full retirement age of 67 - meaning age 78 years and eight months. The math looks like this: Take the full amount of benefits Joe would have received by age 67 ($42,000), divide that by what he would have forfeited each month by taking them early ($300) and you get 140 months. But at what age would waiting until 67 mean he would eventually come out ahead? ![]() During those first five years, he would have received a grand total of $42,000 in benefits. At 62, his benefit would be $700 per month (30% less than his full benefit would be). But he was thinking about starting right away instead. His full retirement age is 67, and if he waits until then, his benefit would be $1,000 per month. Joe is getting ready to turn 62, the youngest age at which you can begin taking benefits. Here’s another hypothetical example for that calculation: Say you are considering whether to take your Social Security benefits early, before reaching your full retirement age. Now let’s look at it from the opposite side. The Break-Even Math on Starting Social Security Early at 62 You’ll get the amount of time (in months) it will take you to break even. Then determine how much money in benefits you’d give up by waiting, and divide that sum by the first one. If you’d like to perform this calculation for yourself, first determine what an 8% increase would add to your monthly benefit. ![]() If not, he may want to take his benefits now. So, if Jeff waits for one year to start taking his Social Security benefit, it will take him 12½ years to get back to even.īased on the above, if Jeff thinks he'll live more than 12½ years, it could make sense to delay taking Social Security, because he would eventually come out ahead. (For purposes of this illustration we’re ignoring the “ time value” of money.) To find out his break-even age, Jeff would divide $12,000 by $80 a month, which comes out to 150 months, or 12½ years. Yes, You Can Collect Social Security from an Ex-Spouse: Here’s HowĮssentially, Jeff forfeited $12,000 ($1,000 times 12), but gained $80 a month.
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