[Updated with new calculator. Removed calculators that are no longer available.]
Mike Piper is the author of the book Social Security Made Simple. In addition to explaining how Social Security works, he recently created an interactive calculator Open Social Security to help you figure out when is the best time to claim Social Security benefits.
I test-drove it with some hypothetical cases. I also ran the same cases through another free calculator by Financial Engines. Both calculators offer some advanced options. I left everything at the default settings.
Case 1
This simplest case involves a single person who has never married.
Assumptions: Female, single, never married, born in April 1958. Estimated benefit is $2,500/month at Full Retirement Age.
Open Social Security: Start at age 69 and 4 months.
Financial Engines: Start at age 70.
Although Open Social Security suggested a slightly different starting date, it also shows if she starts at age 70 as suggested by the Financial Engines calculator, the total benefits are only 0.15% less in her lifetime. I wouldn’t lose sleep over whether the best time to start should really be 69 and 4 months or 70. Starting somewhere between 69 and 70 would be good.
Case 2
Case 2 involves a married couple with similar ages and earnings history.
Assumptions: Husband was born in April 1954, wife in April 1957. Estimated benefit is $2,000/month for both at Full Retirement Age.
Open Social Security: Wife starts at age 62 and 1 month. Husband starts at age 70.
Financial Engines: Wife starts at 65. Husband starts at age 70.
The difference is only in when wife should start. Open Social Security shows having wife start at 65 as opposed to 62 and 1 month reduces the lifetime benefits by 0.8%. Again, because the difference is quite small, I would say both calculators point to the same direction. Whether wife should really start at 62, 65, or anywhere in between, doesn’t matter that much.
Case 3
In case 3, the gaps in age and earnings between husband and wife are larger. The estimated benefit for the lower-earning spouse is still more than 50% of that for the higher-earning spouse.
Assumptions: Husband was born in April 1953, with an estimated benefit of $2,435/month at his Full Retirement Age. Wife was born in April 1959, with an estimated benefit of $2,044/month at her Full Retirement Age.
Open Social Security: Wife starts at age 62 and 1 month (husband is 68 and 1 month at that time); husband files a restricted application to claim spousal benefits at the same time. Husband switches to his own benefits at age 70.
Financial Engines: The same.
The two calculators agree. In this case the husband can claim two years of spousal benefits because he was born before the cutoff date for the change in the laws a few years ago.
Case 4
In case 4 the lower-earning spouse is older. Her estimated benefit is less than one half of her husband’s.
Assumptions: Husband was born in April 1965, with an estimated benefit of $2,367/month at his Full Retirement Age. Wife was born in April 1962, with an estimated benefit of $1,000/month at her Full Retirement Age.
Open Social Security: Wife starts at age 65 and 5 months (husband is 62 and 5 months at that time). Husband waits until age 70; wife also switches to spousal benefits at that time.
Financial Engines: Wife claims at 67 (husband is 64 at that time). Husband waits until age 70; wife also switches to spousal benefits at that time.
Again the two calculators pretty much agree. The Financial Engines calculator suggested age 67 because it only deals with full year ages. Open Social Security shows the difference in total lifetime benefits between having wife start at anywhere between 62 and 67 is less than 0.25%. In this case the option to file a restricted application for spousal benefits isn’t available to the husband because he was born after the cutoff date for the change in the laws a few years ago.
Which Do You Listen To?
The two free calculators pretty much agree in all these relatively straight forward cases. I like the “compare alternative” feature in Open Social Security. We see in one case a difference of 5 years in the claiming timing makes little difference in total lifetime benefits. So as long as you go toward the right direction, you don’t have to be very exact in the actual timing.
Besides the two free calculators, there are also two paid calculators Social Security Solutions and Maximize My Social Security. If you have complex situations such as previous marriages, children’s benefits, disability benefits, etc., maybe the paid calculators will give you something different. If you have straight forward cases, I think the free calculators will do just fine. That said, for a one-time cost of $50 or so, even if you waste it just because you want a second, third, or fourth opinion, it still wouldn’t be a big deal.
Finally we need to keep in mind that all calculators make assumptions and projections on longevity, which will not match your actual longevity. We can only make the best educated guesses. A 1% difference in total lifetime benefits according to the assumptions and projections of a calculator can very well be within the margin of error in real life.
Early Retirement
Open Social Security asks for an estimate of your primary insurance amount (PIA), which is the amount you will receive if you start your benefits at your full retirement age. The estimate that shows on your statement from Social Security Administration assumes you will continue working at your current income until your full retirement age. If you are going to retire sooner, you need a different estimate of your PIA.
Open Social Security asks about whether you are still working and when you will stop working, but those questions are not for estimating your PIA in case you retire early. They are for calculating the changes in benefits due to the earnings test. This other free online tool – https://ssa.tools – will help you get an estimate of your PIA if you are planning to retire before your full retirement age.
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Dave Stamp says
The SSAnalyze calculator is the only one that includes a discount rate % for the risk of accepting SS on a monthly basis, instead of a lump sum. Certainly something to be considered. I like it because at a 5% discount it tells me to take SS when I’m ~ 63.5 vs. slugging it out until 70. Something I was thinking made more sense for my particular situation anyway.
Sam R says
Harry, what a timely post. I was looking for a social security calculator to figure out at what age hubby and I best withdraw from social security. (Result: me at age 63.5. Hubby at age 70)
But … the Vanguard Financial Plan that we use, calculate based on withdrawing SS at the age of 62. Ha!
The CFP said it was because they want us not to touch our investments at age 62, and instead let them grow.
Hm… What do you think?
Harry Sit says
There isn’t much difference between 63-1/2 and 62. Don’t sweat it.
Sharon says
Thank you for the information regarding SS. I am far past my second bend point according to the spreadsheet you set up. I read the previous comments and ran my information through three of the SS calculators which were mentioned. I am divorced after 25 years of marriage and have remained single. The only calculator which took this into account was the one from AARP. Neither the T. Rowe Price nor the SSAnalyze calculators factored in that information although both of them had places in which to enter marital status, and neither of them mentioned the fact that I am eligible to draw on my ex-husband’s SS until I want to draw on my own.
I just thought I would mention this for anyone else who might be in a similar situation.
Once again, thanks for all the information you provide.
Diane says
I have a unique situation. I am 64 my husband is 58. I will be applying for SS hopefully at 66. Are there any stratigies for this situation?
Harry Sit says
What did the free calculators say? Links are in the article.
Lewis Perkins says
What do you think of Maximize My Social Security?
Harry Sit says
See the last paragraph.
Neil M says
Our situation is quite similar to case 1.
Yesterday I went to the SS office to discuss strategies. 🙂
I was told that the new rules say that if my wife has a benefit of her own and it is higher than the spousal benefit, she has to take hers. She cannot recieve the spousal.
According to AARP this is a new rule.
I went to the the links listed above and here are my findings:
Financial Engines still suggested maximization by me waiting and wife receiving spousal for 4 years. (Assuming average or above average life expectancy.)
AARP indicated their calculators were under review for the new laws.
T Rowe Price said theirs had been retired and sent me to the SSG website.
SSAnalyze did not have anywhere I could find to indicate earnings or benefit estimates from SS.
Are there any new calculators out there that have the new laws built in?
Any other suggestions?
The Social Security rep I spoke with clearly believed that I should start taking my benefits immediately even though we have the means to wait.
Thank you for your help.
Neil
JustADoc says
The more I look at this the wiser it seems to collect at 62 and just put that money away in savings/CDs/etc. At 70 you take the difference out each month to act like you are collecting the full amount you would have received at 70.
Assuming a 4% rate of return you will be 86+ before you are financially ahead by waiting until 70.
The majority of us will not make 87 and even if we do, most of us are spending less than then we were when we were 67.
Unless you have longevity in your genes, I don’t understand not taking at 62.
Eg, starting at 62 you get $1200 month. Waiting until 70 you would get $2112.
If that $1200/month is invested/saved at 4% until 70 and then money from that account is withdrawn at $912/mo to make up the difference to $2112 at age 70 then you will be 86 years and 5 months old before you have an extra dime by deferring.
What you also have is, if at 67 you are diagnosed with metastatic cancer(or die in a wreak or have a fatal MI or etc, etc,etc), you have $72,000 more than if you waited until the 70 that you will never see.
Calmaniac says
JustADoc, you are thinking about only your longevity. If you are married, you have to think about your combined longevity with your spouse, as one of the couple is very likely to survive past 86. The age 70 calculus becomes even more of a no brainer in many marriages with an older husband who has a larger PIA. If you are single, take it at 62 and enjoy. If you are married, you need to do more homework. 😉
calmanic (AlsoADoc)
Serbeer says
JustADoc: I support taking at 70 if you can afford to wait, because SS is an excellent longetivity insurance, inflation adjusted at that. If you need the money, then you have no choice but to take it earlier, but if you are going to let it sit idle in account as you say, you have nothing to lose by waiting (cannot take it with you to the other side, only your heirs can benefit) but much to gain in case your projections prove wrong since, in such case, you will probably discover that you based the rest of financial planning for your family on wrong assumptions as well and you have a problem when it is too late to do anything about it.
East Coast says
For case #1, why would waiting until age 70 and maximizing social security result in collecting less over a lifetime (albeit a small amount)? Everything I’ve read says to wait until age 70, not begin collecting 8 months before that. Thanks for any help understanding this.
Harry Sit says
The future benefits are discounted. If the life expectancy is short enough or the discount rate is high enough, claiming sooner can result in higher total lifetime benefits. If I change the gender from female to male (shorter life expectancy), the calculator gives 68 and 2 months. If I enable the Advanced Options and choose a mortality table for smokers (“2017 CSO Smoker Residual Standard”), the calculator gives 65 and 7 months. If I further change the discount rate from 0.87% to 1.87%, the calculator gives 62 and 2 months.
KD says
Harry, Could you please let Mike know that there is a major bug in this calculator?
I put in large differences in age – 15 to 30 yrs. Then put a low PIA of $1500 for the older Spouse and a high (currrent estimated) PIA for the younger spouse of $2800. Then I used advanced options to put in no future income for the younger spouse. The calculator should have reduced the PIA of the younger spouse for the future zeros. But it does not. It recommends younger spouse take SS at 70 with $3500 plus in SS. This is simply wrong. It can never go this high. The calculator is not lowering PIA of younger spouse with the expected zeros in future.
Harry Sit says
The calculator expects the PIA with the zero earning years already accounted for. When the $2,800 isn’t your true PIA, you can use this website to estimate the PIA with zero earning years in the future and then feed it to the calculator.
https://socialsecurity.tools
NYC'er says
fyi, there has been an update to socialsecurity.tools, which now provides for a visualization of the interaction between spouses for various claiming dates. It doesn’t optimize a strategy, but it nicely shows the possibilities for a spouse’s benefit based on claiming dates for each person.
John says
Harry, for case 1 (single and never married) what is the logic on NOT claiming at 62 and instead waiting till 70?
If this person dies at 68 they get nothing. I understand the 8% increase in benefit by waiting and maybe the benefits favor married couples or if you have kids.
But isn’t the additional 8% increase for waiting too low a benefit considering it is the sum of market returns and also mortality credits. Assuming average market returns of 7% and 5% for mortality credits, then I would say if the government gave the case 1 individual 12% more it would be more fair.
Thoughts?
Harry Sit says
The case for delay is always that getting a higher monthly benefit for fewer years is worth more than getting a lower monthly benefit for more years. The 8% increase was set by law using interest rates in a certain interest rate environment and life expectancy assumptions many years ago. Whether it’s advantageous to delay depends on how the current interest rates and life expectancies compare with the interest rate and life expectancy assumptions embedded in the law. When the interest rates were low in the 2010’s, it was a no-brainer to delay unless you have health problems. The case for delay isn’t as strong now because the interest rates are higher than in the 2010’s but it’s still not as high as the assumed rate when the increase was set to 8%. A delay won’t be beneficial if interest rates continue to go up and exceed the rate assumptions implied in the law.
Re-running the Open Social Security calculator for a 60-year-old female shows the best age to claim is 68 and 4 months under the default life expectancy table. It’s 69 and 3 months using the non-smoker super-preferred life expectancy. Claiming at 62 would give 4.1% and 7.8% less in the present value of total benefits respectively.