Portfolio Toolbox
Social Security card

Social Security

You can start collecting Social Security as early as age 62, albeit at a reduced rate from your full retirement age (FRA). Each year you delay collecting Social Security after FRA increases your benefit by 8%, until you reach age 70. Below are estimated starting monthly Social Security benefit amounts based on the benefit you receive at full retirement age below.

Once you start collecting Social Security, your monthly benefit amount is adjusted for inflation by an annual cost-of-living adjustment (COLA) that usually takes effect in January and is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Should you start collecting Social Security at age 62 or wait until 70?

The best time to start collecting Social Security benefits is based on your individual preferences and circumstances. If you knew how long you would live, it would be easy to determine the best time to start collecting Social Security in order to maximize your benefits. (spoiler alert: if you have a shorter life expectancy than the IRS estimate, it is probably a good idea to start collecting benefits sooner.) Social Security is designed to pay around the same amount of money over your life expectancy regardless of when you start collecting. This tool helps you visualize the break-even point between collecting Social Security benefits sooner versus later.

As long as your retirement spending habits remain constant, every dollar you receive in Social Security benefits is a dollar you don't need to withdrawal from your retirement account. This reduced withdrawal leaves more money invested, so Social Security effectively functions like an investment in your portfolio.

If you start collecting Social Security at age 62, and earn an average return of 6% per year with an average COLA of 2%, you will accumulate more money than if you wait to start collecting Social Security at 70, until you reach 86 years old. If you pass away before using the funds, you can bequeath the benefits you have already received to your heirs. With an average 7% return, your breakeven point is around 89 years old.

Time in the market is more important than timing the market.

You can compare the impact of the effective investment of your monthly Social Security benefit at different starting ages using the tool below. This tool defaults to a hypothetical $1,000 monthly benefit at full retirement age.

To view a personalized estimate of your total benefits below you will need your estimated Social Security benefit available from my Social Security on ssa.gov. You can still compare the impact of different starting ages for collecting Social Security without your personalized estimate.

Your life expectancy is calculated from your birth year based on Appendix B - Table I found in IRS Publication 590. You can adjust your life expectancy using the slider. Calculations include cost-of-living adjustments (COLA).

Calculations do not consider spousal benefits, although a popular claiming strategy for Social Security is the spouse with a lower SS benefit starts at age 62, while the spouse with a higher SS benefit starts at age 70. If you would like to consider other possible joint claiming strategies see Open Social Security for help.