I was looking around on the Social Security website and found their retirement estimator. For fun, I plugged in our numbers to estimate our benefit. This is what it spit out:
At your current earnings rate, if you stop working and start receiving Social Security benefits…
At age 62, your monthly benefit will be about…$1,763.00.
At full retirement age (67 Years and 00 Month(s) for you), your monthly benefit will be about…$2,543.00.
At age 70, your monthly benefit will be about…$3,162.00.
Because it’s not clear from the information posted above, I did a little research to find that these numbers ARE NOT adjusted for inflation.
The interesting thing to note is the difference in the benefit amount for waiting to take benefits at age 67 rather than 62. According to my math, the difference is about 7.6% per year:
But, by agreeing to wait, you lose out on some benefits (assuming a 3% COLA):
But, assuming you were interested in waiting, how old would you have to be in order to pass the point where waiting was to your benefit (your break-even age)? For this example, it looks something like this:
Of course, the real risk in waiting to collect is death. How likely are you going to live into your 80s? That’s anyone’s guess. My dad didn’t even make it to retirement age. My mom will end up collecting his benefits.
It may make sense to put off collecting social security if you have earned income that would put your benefits at risk of becoming subject to forfeiter for every year before you reach full retirement age (read How Work Affects Your Benefits).
One last thing, you can always take benefits early and if you decide you’d like the higher benefit, you can pay back all your benefits received and start over from scratch (read more here).
I just hope social security is still around by the time I retire.