Dear Rusty: I am 68 years old, born in July 1954. I have the credits necessary to qualify for benefits. The Social Security website says that if I continue to work to age 70 with yearly earnings of $206,000, my monthly benefit would be $4,245. If I stop working now, and start taking benefits in January 2023, my benefit would be $3778. The number of months between January 2023 and July 2024 is 19. Nineteen months of benefits for that period would be $71,782. It looks like it would take about 17 years to make up the difference between taking the money in January vs. waiting until age 70, which would put me at age 85. I don’t think that I would live much past that age, given my family history. Do you think it wise on my part to begin taking benefits in January 2023, and are my calculations correct? Signed: Trying to Decide
Dear Trying: Well, the difference between your monthly payment at age 70 vs. your benefit amount in January 2023 is $467, so it would take you about 154 months (just under 13 years) to recover that $71,782. But that doesn’t take future cost of living adjustments (COLA) into account. Average annual COLA over the last 20 years was about 2%, and if you factor average future COLA into the equation you would likely break even at about age 81 (if you wait until age 70 to claim). And this is where your life expectancy comes in.
According to Social Security, the average life expectancy for a man your age is 85, which means that if you claim at 70 and enjoy average longevity, you’ll collect that higher benefit for an extra 4 years. That would mean more than $22,000 in additional benefits over your lifetime. Of course, no one knows how long they will live, but if you’d like to get a more personal estimate of your life expectancy, I suggest you try this tool: www.socialsecurityreport.org/tools/life-expectancy-calculator/. This tool takes your lifestyle and current health status, as well as your family history, into account.
When to claim is always a personal choice, but in your specific circumstances – since you apparently don’t need the money right now and have a family history which suggests longevity – waiting until age 70 to claim could not only give you a substantially higher monthly benefit but also the most in cumulative lifetime benefits. And if you’re married, it will also mean the maximum possible survivor benefit for your wife if you predeceased her because, as your widow, your wife would get the benefit you are receiving at your death instead of her own smaller amount. Thus, when you claim your benefit will also affect your wife’s benefit as your surviving widow. In the end, it’s your personal decision to make, after considering all of the above factors, especially your life expectancy.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at email@example.com.