What Is the Best Age to Claim Social Security Benefits? – Part 2
Money Matters – Skloff Financial Group Question of the Month – October 1, 2022
By Aaron Skloff, AIF, CFA, MBA
Q: I read the article ‘What Is the Best Age to Claim Social Security Benefits?’ Part 1. I am 62 years old and am evaluating taking benefits now, waiting until 67 or waiting until 70. What would my lifetime benefits be at each age and what are my breakeven ages?
The Problem – Claiming Social Security Benefits Too Young or Too Old, Instead of the Best Age
While waiting until age 70 will yield the highest annual benefits, it may not yield the highest cumulative benefits. Part of the problem is determining through what age you must collect higher benefits to compensate for the years you delayed collecting benefits (“breakeven age”).
The Solution – Calculate Cumulative Social Security Benefits Based on Starting Age and Breakeven Ages
If you run a Social Security Quick Calculator estimate at age 62, you can determine your benefits at age 62, 67 and 70. Based on your inputs, your annual results are $28,356 at 62, $40,596 at 67 and $50,556 at 70. If you claim benefits at age 62 and live to 100, your cumulative benefits would be $1,105,884. If you delay to age 67, your breakeven age is 78.8 and your cumulative benefits would be $1,380,264. If you delay benefits to 70 versus 67, your breakeven age is 82.4 and your cumulative benefits would be $1,567,236.
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If you claim benefits at age 62 and live to 85, your cumulative benefits would be $680,544. If you delay to age 67, your cumulative benefits would be $771,324. If you delay benefits to 70, your cumulative benefits would be $808,896.
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If you claim benefits at age 62 and live to 75, your cumulative benefits would be $396,984. If you delay to age 67, your cumulative benefits would be $365,364. If you delay benefits to 70, your cumulative benefits would be $303,336.
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Clearly, longevity impacts your cumulative benefits. If you live to age 100, delaying benefits from 62 to 70 increase your cumulative benefits by $461,352 ($1,567,236 – $1,105,884). If you live to 75, delaying benefits from 62 to 70 reduces benefits by $93,648 ($396,984 – $303,336).
Action Steps – Determine the Best Age to Claim Social Security Benefits Based on Your Wants and Needs
Work closely with your Registered Investment Adviser (RIA) to determine the best age to claim Social Security benefits.
Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA), Master of Business Administration (MBA) is CEO of Skloff Financial Group, a Registered Investment Advisory firm. He can be contacted at www.skloff.com or 908-464-3060.
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