Use this calculator to calculate your social security break-even age and plan your retirement age by comparing different cases:
| Social Security and Retirement Info | Age 1: | Age 2: |
|---|---|---|
| Full Retirement Age | ||
| Early Reduction % | ||
| Delayed Credit % | ||
| Total Benefit % | ||
| Break Even Age | ||
| The Break Even Age is the age at which the total lifetime benefits received from Social Security are equal, regardless of whether you claim benefits early or late. | ||
The social security break-even calculator shows the age at which total early benefits equal total benefits from waiting until any later age.
Key Points to Remember While Deciding Retirement Age
1. Early retirement reduces benefits
- Benefits are reduced 5/9 of 1% per month before full retirement age, up to 36 months
- After 36 months, benefits are further reduced by 5/12 of 1% per month
- Retiring at 62 can result in up to a 30% reduction when the full retirement age is 67
2. Delayed retirement increases benefits
- Delayed retirement credits are given for retiring after full retirement age
- To get full credit, must be insured at full retirement age
- No additional credit given after age 69
- Delaying to age 70 can result in maximum benefit amount
3. Full retirement age depends on birth year
- For 1943-1954 birth years, full retirement age is 66
- For 1955-1959 birth years, full retirement age is 66 plus a certain number of months
- For 1960 and later, full retirement age is 67
4. Benefit amount based on lifetime earnings
- Higher lifetime earnings result in higher benefit amount
- Benefit calculated based on 35 highest earning years
5. Spouses can receive benefits based on worker’s record
- Spousal benefits up to 50% of worker’s benefit amount
- Reduced if spouse claims benefits before full retirement age
| Full Retirement Age | |
| If you were born in: | Your full retirement age is: |
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 or later | 67 |
What is the Break-Even Age for Social Security?
The break-even age for Social Security refers to the age at which the total cumulative benefits received from Social Security equal the cumulative benefits you would have received if you had started benefits at your full retirement age (FRA) or any other age. It is an estimated age where the total amount of benefits received by starting early equalizes to the total amount received by starting late.
In short, if you receive benefits up to the break-even age, it does not matter at which age you start receiving benefits.
The break-even age calculation takes into account factors such as the reduction or increase in monthly benefit amounts based on when you choose to start receiving benefits. Starting benefits early reduces your monthly benefit amount, while delaying benefits beyond your full retirement age can increase your monthly benefit amount.
It’s important to note that the break-even age is an estimate and depends on various factors, including life expectancy and individual circumstances. The Social Security Administration (SSA) provides personalized benefit estimates and can offer more accurate calculations based on your specific situation.
What is FRA?
FRA stands for Full Retirement Age. It is the age at which individuals become eligible to receive their full Social Security retirement benefits. The Social Security Administration (SSA) determines the Full Retirement Age and varies based on the year of birth.
For individuals born before a particular year, the FRA is typically 65. However, for those born after that specified year, the FRA gradually increases by a few months each year. For example, if your birth year is 1960 or later, your FRA is 67.
Reaching the Full Retirement Age allows individuals to receive their full, unreduced Social Security benefits based on their work history and lifetime earnings. Starting benefits before the FRA can result in a permanent reduction in the monthly benefit amount while delaying benefits beyond the FRA can lead to an increase in the monthly benefit.
How To Calculate Break-Even Age for Social Security
To calculate the break-even age, you need to look at two things. One is your full retirement age set by the SSA. The other is when you start getting benefits.
Here are the steps to calculate the break-even age:
1. Determine your full retirement age (FRA):
The FRA varies depending on the year you were born. For example, if you were born in 1960 or later, your FRA is 67. You can find the specific FRA for your birth year on the SSA’s website.
2. Decide when to start receiving benefits:
You can start receiving Social Security retirement benefits as early as age 62, but your monthly benefit amount will be permanently reduced compared to what you would receive at your FRA. Alternatively, you can delay benefits beyond your FRA, and your monthly benefit amount will increase.
3. Calculate the monthly benefit reduction or increase:
If you decide to start receiving benefits before your FRA, your monthly benefit amount will be reduced by a certain percentage for each month you claim early. If you delay benefits past your FRA, your monthly benefit amount will increase by a certain percentage for each month you delay, up until age 70.
4. Estimate the cumulative benefits received:
Calculate the total amount of benefits you would receive by starting benefits early, as well as the total amount you would receive by waiting until a later age. This can be done by multiplying the monthly benefit amount by the number of months you will receive benefits.
5. Compare the cumulative benefits:
Compare the total cumulative benefits received by starting early with the total cumulative benefits you would receive by waiting until your FRA. The break-even age is the age at which these two amounts are equal.
Keep in mind that the break-even age calculation is based on various assumptions, such as life expectancy and future benefit adjustments. It’s essential to consider your individual circumstances and consult with a financial advisor or the SSA for personalized advice.
Example of Break-Even Age for Social Security
Let’s consider an individual who is eligible for Social Security benefits and has a full retirement age (FRA) of 67. They have the option to start receiving benefits as early as age 62 or delay benefits until a maximum age of 70.
1. Starting Early
Suppose this individual decides to start receiving benefits at age 62, which is five years before their FRA. By starting early, their monthly benefit amount is reduced by a certain percentage for each month of early claiming.
Now, let’s assume their monthly benefit at the full retirement age of 67 would have been $1,500. However, by choosing to start benefits at age 62, their monthly benefit is reduced to $1,050 (a 30% reduction). This reduction is permanent and will continue throughout their retirement.
2. Starting at FRA
On the other hand, if the individual had waited until their full retirement age of 67 to start benefits, they would have received the full monthly benefit of $1,500.
To calculate the break-even age, we need to compare the cumulative benefits received by starting early with the cumulative benefits if they had waited until their FRA.
3. Comparing the Benefits
Let’s say the individual lives to the age of 80. By starting benefits at age 62, they would receive 18 years of benefits (from age 62 to 80) with a reduced monthly amount of $1,050. This totals to $226,800 ($1,050 x 12 months x 18 years).
If they had waited until their FRA of 67, they would have received benefits for 13 years (from age 67 to 80) with the full monthly benefit amount of $1,500. This totals $234,000 ($1,500 x 12 months x 13 years).
In this example, the break-even age would be around 78.6 years old. At that point, the total cumulative benefits received by starting early ($226,800) would be approximately equal to the cumulative benefits they would have received by waiting until their FRA ($234,000). You can use the social security break-even age calculator given above to validate the result.
Frequently Asked Questions
What is the break-even age for Social Security?
The break-even age for Social Security is the age at which the total cumulative benefits received from starting benefits early are approximately equal to the cumulative benefits received by waiting until a later age. It represents the point where the total benefit amounts converge.
What is the social security break even 62 vs 67?
78.67 Years
What is the social security break even 62 vs 70?
80.37 Years
What is the social security break even 67 vs 70?
82.50 Years
What is the social security break-even for 66 vs 70?
82.17 Years
What is the social security break even 62 vs 66?
78.00 Years
How is the break-even age calculated?
The break-even age is calculated by comparing the cumulative benefits received from starting benefits early with the cumulative benefits that would have been received by waiting until another age. It takes into account factors such as the reduction or increase in monthly benefit amounts based on the chosen claiming age.
Does the break-even age vary for each person?
Yes, the break-even age is different for everyone. It depends on when you claim benefits, the amount you receive, your life expectancy, and other personal factors. The numbers can really vary from one individual to another.
How does starting benefits early impact the break-even point?
Claiming Social Security before your full retirement age reduces your monthly payments. This means it takes longer for the total amount to catch up to what you would have received by waiting. The earlier you start reaping benefits, the longer it takes to break even.
Can I calculate my own break-even age?
You can estimate your break-even age by looking at your birth year when you might claim benefits, and your estimated monthly payment. However, many things can influence the calculation, so treat it as a rough estimate. For a more accurate number based on your situation, the Social Security Administration can provide personalized estimates.
Is break-even age the only important factor in deciding when to claim?
No, while the break-even age is useful, it’s just one consideration. You also need to think about your financial needs, health, life expectancy, and any spousal or survivor benefits. Make sure to evaluate your whole situation and get professional advice to make the best choice for you.
The break-even analysis helps illustrate the trade-off between taking benefits early at a lower rate versus waiting for higher payments. But look at all the variables for your situation before deciding when to begin Social Security. Use the Social Security Break Even Age calculator above to plan ahead.