Longevity as it relates to collecting your Social Security Benefit



Is it better to take reduced benefits at age 62 or full

benefits later? The answer depends, in part, on how

long you live. If you live longer than your “break-even

age,” the overall value of your retirement benefits

taken at full retirement age will begin to outweigh the

value of reduced benefits taken at age 62.

You’ll generally reach your break-even age about 12

years from your full retirement age. For example, if

your full retirement age is 66, you should reach your

break-even age at 78. If you live past this age, you’ll

end up with higher total lifetime benefits by waiting

until full retirement age to start collecting. However,

unless you’re able to invest your benefits rather than

use them for living expenses, your break-even age is

probably not the most important part of the equation.

For many people, what really counts is how much

they’ll receive each month, rather than how much

they’ll accumulate over many years.

Of course, no one can predict exactly how long they’ll

live. But by taking into account your current health,

diet, exercise level, access to quality medical care,

and family health history, you might be able to make a

reasonable assumption.

How much income will you need?

Another important piece of the puzzle is to look at

how much retirement income you’ll need, based partly

on an estimate of your retirement expenses. If there is

a large gap between your projected expenses and

your anticipated income, waiting a few years to retire

and start collecting Social Security benefits may

improve your financial outlook.

If you continue to work and wait until your full

retirement age to start collecting benefits, your Social

Security monthly benefit will be larger. What’s more,

the longer you stay in the workforce, the greater the

amount of money you will earn and have available to

put into your overall retirement savings. Another plus

is that Social Security’s annual cost-of-living

increases are calculated using your initial year’s

benefits as a base–the higher the base, the greater

your annual increase….Stay tuned for more blogs in the weeks to come!!

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