The Social Security system provides benefits to retirees, disabled individuals, and survivors. A crucial decision retirees face is when to start receiving their Social Security benefits. Claiming benefits before your Full Retirement Age (FRA) results in a permanently reduced monthly payment, while delaying past FRA can earn delayed retirement credits, increasing your benefit.
The Social Security Breakeven Calculator helps you determine the age at which the total cumulative benefits received from delaying your claim would surpass the total cumulative benefits from claiming earlier. This "breakeven point" is a key factor in making an informed decision about your retirement income strategy.
How the Calculation Works
This calculator estimates the breakeven age by comparing the total lifetime benefits received under two scenarios:
Scenario 1: Claiming at Early Eligibility Age (e.g., 62): Benefits are reduced permanently.
Scenario 2: Delaying Claiming until FRA or later: Benefits are higher due to delayed retirement credits.
The calculator projects the monthly benefit for each scenario, factoring in the annual Cost-of-Living Adjustment (COLA). It then calculates the cumulative benefits received year by year until the cumulative amount from delaying surpasses the cumulative amount from claiming earlier. The age at which this crossover occurs is the breakeven point.
Formula Components:
Full Retirement Age (FRA): The age at which you can claim 100% of your earned benefit. This varies based on your birth year.
Early Retirement Reduction: For each month claimed before FRA, your benefit is reduced by approximately 5/9 of 1% for the first 36 months, and 5/12 of 1% for any additional months. This equates to a reduction of about 30% if you claim at 62 (assuming an FRA of 67).
Delayed Retirement Credits: For each month you delay claiming past your FRA, you earn credits that increase your benefit by about 8% per year, up to age 70.
Cost-of-Living Adjustment (COLA): An annual increase to your benefit to help offset inflation.
Life Expectancy: A crucial factor, as benefits are paid for life. If you live well beyond the breakeven point, delaying has likely been more financially beneficial.
Using the Calculator
Enter your current age, your planned retirement age (this calculator assumes you will claim at your desired retirement age or earlier if you choose an age before your FRA), your estimated monthly benefit at Full Retirement Age (you can find this on your Social Security statement), the expected annual COLA, and your projected life expectancy. The calculator will then provide the estimated age at which delaying your benefits would become financially advantageous.
Example:
Current Age: 50
Desired Retirement Age: 67 (Assuming this is FRA for simplicity in this example, but the calculator adjusts for claiming earlier)
Estimated Benefit at FRA: $2,500
Annual COLA: 2.0%
Projected Life Expectancy: 90 years
If you were to claim at 62 (with a reduced benefit) versus waiting until FRA (67), the calculator would determine the age at which the total received benefits from waiting outweigh the total received benefits from claiming early. For instance, if the breakeven point is calculated to be age 80, it suggests that if you live past 80, delaying your benefits would have resulted in receiving more total money from Social Security over your lifetime.
Disclaimer: This calculator provides an estimate for informational purposes only. Actual Social Security benefits are subject to various factors and official Social Security Administration (SSA) rules. Consult with a financial advisor for personalized retirement planning.
function calculateBreakeven() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var retirementAge = parseFloat(document.getElementById("retirementAge").value);
var expectedBenefitAtFRA = parseFloat(document.getElementById("expectedBenefitAtFRA").value);
var colaRate = parseFloat(document.getElementById("colaRate").value) / 100; // Convert percentage to decimal
var projectedLifeExpectancy = parseFloat(document.getElementById("projectedLifeExpectancy").value);
var resultElement = document.getElementById("result");
resultElement.style.color = '#28a745'; // Default to success green
// Basic validation
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(expectedBenefitAtFRA) || isNaN(colaRate) || isNaN(projectedLifeExpectancy)) {
resultElement.innerHTML = "Please enter valid numbers for all fields.";
resultElement.style.color = 'red';
return;
}
if (retirementAge < currentAge) {
resultElement.innerHTML = "Retirement Age cannot be before Current Age.";
resultElement.style.color = 'red';
return;
}
if (projectedLifeExpectancy 62 ? 62 : retirementAge); // Claim at 62 or earliest possible if retirement is before 62
if (claimingAgeEarly < 18) claimingAgeEarly = 18; // Minimum age
// Calculate benefit reduction for claiming early
var monthsEarly = (FRA – claimingAgeEarly) * 12;
var reductionFactorEarly = 1 – (monthsEarly * (5/900)); // Approx 5/9 of 1% per month
if (reductionFactorEarly < 0.7) reductionFactorEarly = 0.7; // Benefit cannot be reduced below 70% (approx.)
var benefitEarly = expectedBenefitAtFRA * reductionFactorEarly;
// Calculate benefit increase for delaying past FRA
var monthsDelayed = Math.max(0, retirementAge – FRA) * 12; // If retirementAge is before FRA, no delay credit
var delayCreditFactor = 1 + (monthsDelayed * (8/100)); // 8% per year
var benefitDelayed = expectedBenefitAtFRA * delayCreditFactor;
// Adjusting benefitDelayed if retirementAge is before FRA, but we are comparing to FRA benefit
// For this calculator, let's focus on comparing claiming at an EARLIER age (e.g., 62) vs. RETIREMENT AGE.
// Let's refine: Compare claiming at 62 (or earliest possible if retirement is earlier than 62) vs. claiming at 'retirementAge'.
var actualClaimingAge = Math.min(retirementAge, projectedLifeExpectancy);
var benefitAtRetirementAge;
if (retirementAge < FRA) {
var monthsUnderFRA = (FRA – retirementAge) * 12;
var reductionFactor = 1 – (monthsUnderFRA * (5/900));
if (reductionFactor < 0.7) reductionFactor = 0.7;
benefitAtRetirementAge = expectedBenefitAtFRA * reductionFactor;
} else { // Claiming at or after FRA
var monthsOverFRA = (retirementAge – FRA) * 12;
var creditFactor = 1 + (monthsOverFRA * (8/100));
benefitAtRetirementAge = expectedBenefitAtFRA * creditFactor;
}
// Now compare claiming at 'claimingAgeEarly' vs. claiming at 'retirementAge'
// Let's simplify the comparison to: claiming at 62 (or earliest) vs. claiming at FRA.
// This is a more common breakeven scenario.
claimingAgeEarly = Math.min(62, projectedLifeExpectancy); // Assume claiming at 62, but not past life expectancy
if(claimingAgeEarly < 18) claimingAgeEarly = 18;
monthsEarly = (FRA – claimingAgeEarly) * 12;
reductionFactorEarly = 1 – (monthsEarly * (5/900));
if (reductionFactorEarly < 0.7) reductionFactorEarly = 0.7;
benefitEarly = expectedBenefitAtFRA * reductionFactorEarly;
var benefitAtFRA = expectedBenefitAtFRA; // This is the baseline
var currentYearlyBenefitEarly = benefitEarly * 12;
var currentYearlyBenefitFRA = benefitAtFRA * 12;
var cumulativeBenefitEarly = 0;
var cumulativeBenefitFRA = 0;
var colaFactor = 1;
var breakevenAge = -1;
for (var age = claimingAgeEarly; age claimingAgeEarly) { // COLA starts applying after the first full year of benefits
colaFactor = 1 + colaRate;
currentYearlyBenefitEarly *= colaFactor;
currentYearlyBenefitFRA *= colaFactor;
}
// Add benefits for the current year
cumulativeBenefitEarly += currentYearlyBenefitEarly;
cumulativeBenefitFRA += currentYearlyBenefitFRA;
// Check for breakeven
if (cumulativeBenefitFRA > cumulativeBenefitEarly && age >= FRA) { // Breakeven must occur at or after FRA
breakevenAge = age;
break;
}
}
if (breakevenAge !== -1) {
resultElement.innerHTML = "" + breakevenAge.toFixed(0) + " Years";
resultElement.title = `At age ${breakevenAge}, the total cumulative benefits received from claiming at Full Retirement Age (FRA) (${FRA}) surpass the total received from claiming earlier (at age ${claimingAgeEarly}).`;
} else {
resultElement.innerHTML = "No breakeven within projected lifespan.";
resultElement.title = "Based on your inputs, claiming earlier at age " + claimingAgeEarly + " would result in receiving more total benefits than delaying until FRA, throughout your projected lifespan.";
resultElement.style.color = 'orange';
}
}