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
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!!