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Social Security: The 3 Most Revealing Charts About Your Benefits

I've written dozens of articles about Social Security over the past year, and along the way I've created a large number of charts to illustrate one aspect of the topic or another. With this in mind, I thought it'd be interesting to share three of the more informative charts together in one place.

The first is probably one you've seen before. It illustrates the relationship between the size of your monthly benefits in relation to your primary insurance amount, and when you elect to take them.

Choosing to take them at age 62 (the earliest possible time) as opposed to 66 (the prevailing full retirement age), or even 70 (after which you no longer get credit for deferring), can make a big difference in your monthly check.

Because of early benefit reductions before 66, your actual benefits get progressively smaller the earlier you elect to receive them. On the flipside, every year you defer after reaching full retirement will boost your benefits by 8%.

The second figure expands on this by illustrating the cumulative surplus or deficit associated with taking benefits immediately after turning 62, as opposed to waiting until full retirement at 66.

In official retirement jargon, this is known as a breakeven analysis. Before turning 77, your cumulative benefits are greater if you begin receiving them at 62. This is because you've received checks -- albeit smaller ones -- for four more years than had you waited until your 66th birthday.

The relationship inverts once you turn 78. After that, the larger checks you get as a result of waiting outpace the smaller but more numerous checks associated with claiming benefits early. And as you can see, the extra money you receive by waiting until full retirement age rises quickly as time goes on.

Last but not least, the third figure shows the percentage of men and women who choose to claim Social Security benefits at age 62. Although it may not be obvious from the chart, this remains the most prevalent age at which retirees begin claiming benefits.

There are a variety of reasons for this. If people aren't optimistic about their life expectancy, then it's prudent to take benefits sooner rather than later. Additionally, if you're employed in a physically or emotionally demanding job, then applying for Social Security could be the best way to extract yourself from that environment.

Of course, at the end of the day, the decision of when to apply for benefits is deeply personal and based on your own particular set of facts and circumstances. Nevertheless, figures like these can help steer you in the best direction.

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Read/Post Comments (30) | Recommend This Article (40)

Comments from our Foolish Readers

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  • Report this Comment On August 18, 2014, at 8:26 AM, Ron2121 wrote:

    What a bunch of dopey charts! Why not make the cumulative surplus or deficit chart go out to age 115 so we can see what we're really shorting ourselves. Looks like I'm breaking even if I make it to 90...14 years after age 62 (surplus) and 14 years prior to 90 (deficit).

  • Report this Comment On August 18, 2014, at 9:57 AM, Fight4Justice wrote:

    I have little to no expectation of living much beyond 70, if I make it that far. So, I will be taking SS benefits ASAP provided that there are any funds remaining in the next six years. 'A bird in the hand......' seems fitting here.

  • Report this Comment On August 18, 2014, at 10:55 AM, kennyhobo wrote:

    These analysis are so incomplete that I question the intelligence of the authors. They certainly don't provide enough useful information. For example, what earnings assumptions are made? If I make n% per year investing my early SS payments, how does the break even point change. Over the long run, 8% might be a good "n". Certainly, 4% is a conservative "n". The information also fails to discuss spending patterns over the age range. When I'm under 70, I expect to be healthier and can use the money to do fun things - travel, hobbies, etc. As I age, my abilities to do such things reduces. How many 80 year old world travelers are there? There certainly are some and I bet they took their SS early because they also knew how to invest.

  • Report this Comment On August 18, 2014, at 11:53 AM, 2thfool wrote:

    Social Security "delayers" might find they are not actually getting 8% each year (do the math for your own situation, of course). Chances are, delayers will be earning enough income to put 80% of their Social Security income increase into tax territory, and since this will be taxed at ordinary income rates, the 8% looks like the new 6% or so.

  • Report this Comment On August 18, 2014, at 1:15 PM, FUpayMe wrote:

    Is this all a plan by the FED to keep from going broke too fast?

    I will be taking my little SS ASAP and investing or spending as I see fit. If the break even if close to 90, I don't want the extra money then I want it now.

    I have insurance to cover any "shortfall" in those way later years.

  • Report this Comment On August 18, 2014, at 2:53 PM, greyhound44 wrote:

    What BS!!!

    I retired 31 Aug 2003 at age 58.75 after having paid the MAXIMUM SS portion of FICA for 35 + years.

    That's the threshold to get MAXIMUM SS retirement benefits which I took (reduced for age) at 62.

    Have collected $150,059,70 tax free as of 12 Aug and will see another $1760.90 on 9 Sept while on an Alaskan cruise.

    My break even was 78.8 years, but by having taken SS retirement benefits early, my (mostly off shore in LLC) IRAs are $2,035, 900.80., and my net worth is, well, higher than most all governments in the USA!!!!!!

    retired expatriate (11 years in Conde Nast's 2013 "World's Best City")

  • Report this Comment On August 18, 2014, at 3:59 PM, prevention wrote:

    Could we see an analysis where the person who takes SS at 62 invests that money. Surely, if then compared to the person who waits until 70 those investments in a Roth IRA would have grown significantly by age 70. Don't forget to include the savers' tax credit in the calculation.

  • Report this Comment On August 18, 2014, at 4:11 PM, wrhc wrote:

    Why do they continue to run these silly stories about waiting to receive your social security? Get your social security as SOON AS YOU CAN! Don't wait! First of all, everybody knows you greatly increase your risk of getting NOTHING if you wait - because there is an ever-increasing likelihood it will be gone. Even the silly chart about the total benefits reverse at 78, assumes the readers are idiots. It doesn't account for any interest during the years from 62 years of age to 78 years of age. If you pulled the money at 62 and accumulated interest - the point of reversal is a substantially older age. With that being said, not many people would be able to do that - because they need the money when they retire! Get your money, it is YOURS! These stories recommend delaying, so that you will die before seeing a dime - after paying in for decades. Get your money, live the life you deserve and don't listen to idiots like the writer of this article.

  • Report this Comment On August 18, 2014, at 5:28 PM, dusty10x wrote:

    Most people work nearly 45 years.....The way the benefit formula works; the first 20 years accounts for 3/4 of your benefit and the next 25 years accounts for the last 1/4........If you only work 20 years you will receive around 3/4 of what the next guy that worked 45 years gets.........

  • Report this Comment On August 18, 2014, at 6:01 PM, monkeyfurball wrote:

    I can see waiting till FRA since from age 62 to FRA there is an annual 7% added to the benefit. I won't wait beyond that age however because I don't want to die without getting a majority of my benefit.

  • Report this Comment On August 18, 2014, at 6:07 PM, monkeyfurball wrote:

    @greyhound44. Your IRA's aren't really worth $2 mill because you have to pay income taxes on that money yet. And, it's irrelevant what your net worth is compared to any State or Fed government because they can raise taxes to pay bills and you can't. And don't be trying to brag about how wonderful you have it living outside of the USA. It's a crap shoot trying to live expat. I know since I've traveled and lived in dozens and dozens of foreign countries in my life.

  • Report this Comment On August 18, 2014, at 6:34 PM, tonyatn wrote:

    Doesn't really say much.

    Is a person living longer than before? MAYBE.

    Is the government getting more stingy with giving benefits? YES.

  • Report this Comment On August 18, 2014, at 7:19 PM, colonel wrote:

    One thing that needs to be added to this breakeven analysis is that if you keep working until age 70, you will pay thousands of more dollars INTO social security (SS) before you draw a benefit. If you claim at 62 and don't earn more income, you will cease putting more money into the system. Until you stop working, you and your employer are paying a combined 12.4% of your income into SS. So, if you make $100K per year, in the 8 years between 62 and 70 you will pay 8 X 12.4 = $99,200 into the system. So, not only will you have lost 8 years of the benefit stream but also you have to get back not only the lost benefits but also the excess payments to SS that you have made. This shifts the breakeven to several years later. It also increases the risk that you won't live long enough to realize a net increase in benefit by waiting to claim.

  • Report this Comment On August 18, 2014, at 7:36 PM, sporked wrote:

    colonel...........Excellent Post

  • Report this Comment On August 18, 2014, at 7:38 PM, sporked wrote:

    I plan on living to 100 years old but I'm taking SS at 62 because none of my plans ever work!

  • Report this Comment On August 18, 2014, at 7:47 PM, colonel wrote:

    One of the things I find interesting about the perennial debate on when to claim social security is that the perspective of behavioral economists isn't usually added. For example, is it possible that claimants undervalue the early claiming option because at some level they psychologically cannot accept that they may not live a long life? That surely it will be the next fellow or lady who is in the 40% that will not live to the financial break-even point? Or that they are surely in the 15% who will live to 90?


  • Report this Comment On August 18, 2014, at 7:54 PM, colonel wrote:

    Thanks, sporked. This is just an anecdote but I was talking to my best friend the other day and he was telling me he expects to live to 100 because his grandmother did. My friend is just over six feet and he weighs over 300 pounds; and he is neurologically disabled because of a surgeon's error in draining much of my friend's spinal fluid in a botched back operation. His expectation of an exceptionally long life is, to me, the definition of optimism. But I also think it exemplifies how much people tend to deny their own mortality.

  • Report this Comment On August 18, 2014, at 8:17 PM, grandmato5 wrote: to me about insurance if you retire at 62. If you aren't old enough for medicare, then that just leaves private insurance to the tune of about !,000/month.

  • Report this Comment On August 18, 2014, at 8:51 PM, shorthosep wrote:

    My wife will be getting her first social security deposit this month. I encouraged her to do it for one reason. I am a retired firefighter so I am considered a government employee with a pension. Also because of that I am entitled to nothing from my wife's social security. 2 fellow firefighter's wives past before they were eligible to collect their social security. One of the wives worked over 25 years in a factory before she passed. When my friend went to social security to claim his wives social security at age 60 social security came back and told him this----- YOU GET NOTHING! Sorry we collected social security from your wife for over 25 years but since your considered a government employee with a pension your not eligible. What they basicly said is that we're keeping all the money your wife had in social security ---- have a nice day. On top of that this firefighter worked a 2nd part time job and reached his 40 quarters to be eligible for his own social security. When he went into to apply for it social security told him under normal conditions your social security benefit would be $780 a month but because your consided a government employee with a pension your monthly deposit will be $380. Funny a wife that never worked outside the home is eligible for half her husband's social security but because we;re considered government employees were not even eligible for what we actually EARNED!

  • Report this Comment On August 18, 2014, at 9:59 PM, frogspit wrote:

    I've never expected to have a long life. I never expected to make it to 30, too many risky activities. Never the less, I doubt I will retire before I can get Medicare (if I live so long). Plus, if I don't need the money before FRA I'd rather defer just in case I do live to 100.

    From what I've seen of the aging process, I'm not too keen on living past 90 anyway. Your mileage may vary.

  • Report this Comment On August 18, 2014, at 10:09 PM, Chamacofeo wrote:

    What these articles never tell you is that if you die at 80 or 85 (if you are lucky enough), then the government keeps most of your money, now isn't that nice?

    American male life expectancy is what...77.1 years?

    So, if you wait until 66 to get SS and you die as expected, you will only get 11 years of benefits instead of 15 if you get it at 62.

    Now really think about this and about the many articles you see printed telling you to wait...wonder why?

  • Report this Comment On August 18, 2014, at 10:50 PM, cpflum wrote:

    If I defer retirement to age 70 I would be about $4,600.00 ahead at age 82. I am in good health and according to the statistics ( I have a life expectancy of over 90 years, and at that age I would be $73,600.00 ahead vs. retirement at age 66. My point here is that there is no logical argument for the best retirement age without taking into account your current health and finances.

  • Report this Comment On August 19, 2014, at 2:30 AM, colonel wrote:

    Another thing these charts do not factor in is the annual worth of a year of life in retirement freedom versus wage slavery. Personally, I think my freedom is priceless and it's worth more than my employer pays me for it. But even if I take my annual compensation as a rough approximation of what my life is worth (that's what I accept from my employer for it), it's $100,000 per year in my case. So, I would need to add the foregone opportunity of gaining a life value of $100K per year for 8 years ($800K) if I deferred from age 62 to age 70 to collect. To conduct a break even analysis on when I would begin to receive a value more than opportunities lost, I would have to add in also the lost 8 years of benefits ($182400) and the recompense of the 8 years of additional SS taxes paid on earned income ($99,200) in the interim. This totals to over $1 It comes to about 63 years after age 70 to break even or to begin receiving more than was lost by deferring.

  • Report this Comment On August 19, 2014, at 5:43 AM, bsteaves wrote:

    Great News:

    Now you read the web about your benefits if you live overseas.

    Thank You SSA for restoring the web site for overseas Americans after a one year suspension.

  • Report this Comment On August 19, 2014, at 9:29 AM, KatWisc wrote:

    The charts are nice but at the end of the day, most people its not a choice. Either they can't work any longer because of health (arthritis or back pain, etc) and thus will take it as soon as they are assuming because they are in bad health they won't live that long anyway. Or your in great health and then you fear outliving your wealth... so either your already rich and early retired anyway.. not caring about social security or your not rich and will work to be sure you don't outlive it. Or you can be like my father still working at the age of because he's self employed and can't find anyone to buy the business and two because he says if he stops working he assumes he'll die because that's what happened to all his friends. Sometimes working has nothing to do with taxes, SS, earnings, etc.. it should be about a passion that motivates you to get out of bed everyday and still gives you a zest for life. 79 and still hoofing it across farmers fields, digging holes, and spryer than most people in their 50s. People in the community still depend on him and it makes him feel needed... quitting would mean losing that sense of self which in many people hurries up the aging process.

  • Report this Comment On August 19, 2014, at 9:53 AM, ohiodale wrote:

    One could split the difference and take it at 65. BTW, full social security is at the age of 67 not 66. I plan to wait until I am 67. Not only because of SS but to give myself 5 more years to accummulate investment income. In 5 years I could add $300k to my 401k which translates into an extra $15k per year plus the extra $9k per year in social security. $2000 per month is a lot of money.

  • Report this Comment On August 19, 2014, at 11:22 AM, LTInvestor wrote:

    Why such hostility toward the author? There is no advocacy, simply an discussion of the actuarial facts as he currently knows them. So what if you don't receive all the benefits you've paid in? This is a great country and I've received far more in benefits from living here than I could ever pay in taxes. And no, I've never received a government check, earned or otherwise.

  • Report this Comment On August 19, 2014, at 3:38 PM, macktractor wrote:

    I believe the charts, but for the past 7 years our liberal minded congress has studied all kinds of ways to steal this SS money from our and our employer payroll contributions. One of these days they will get their wish and ram thru some SS cuts that will most likely punish those of us that worked all of our lives and not punish the rich nor the deadbeats that mooched a free ride out of life already.

  • Report this Comment On August 19, 2014, at 10:52 PM, Jimvski1 wrote:

    I agree with LTInvestor - why such hostility? The author presented a factual and very basic analysis of income taken at age 62 vs. a slightly greater income taken at 66. I'm glad someone finally wrote this - I'm tired of always seeing "wait, wait, wait" which may nor be the best for some people. He didn't factor in investment income on the benefits (some people may need to spend them), using SS money to delay withdrawls from an IRA/401K, people's health, or any of the numerous other options people have for financing retirement. Everyone's situation is different and you're expected to make an intelligent, informed decision for yourself based on YOUR circumstances. He gave a decent basic analysis on the SS benefits ONLY.

  • Report this Comment On August 20, 2014, at 2:53 PM, DanFPilot wrote:

    Take SS early and often. Especially if your a man. Even if you are in perfect health, you never know when your going to die. Accidents do happen.

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John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

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