Social Security Breakeven

Social Security Corner

What Is My Breakeven Age?

 

Most people overstate the risk of dying young moreso than the risk of longevity. When planning for social security it is difficult to know what will be the best filing age because you can't really forecast your lifespan

It is a lot easier to make a better decision with breakeven rates. As morbid as it sounds, it can actually make you feel a little bit clearer about your filing age.

Example of Breakeven 1

 

Meet our fictitous couple Harry & Mary. Harry born in 1955 is going to file and suspend his benefits and take a spousal benefit on Mary born 1954. Harry is worried about dying young, yet Mary's mom died at 91 and so she believe's longevity may be a factor. Let's take a look at the numbers:

 

Harry's PIA (monthly check) at FRA (66+ 2 mo's) is 2100

Mary's PIA (monthly check) at FRA (66) is 2200

 

For Harry to file and suspend and make it all worthwhile he needs to live until age 75. Here are the important considerations for the couple. Maximizing Mary's benefit by delaying her own benefit until 70, whilst starting a spousal benefit at age 66. For Harry if he were to start at 62 vs 65 his breakeven is his age 75. So if he died before that age filing at 62 is best. If he were to live on it would be best to delay. The best strategy if they wanted to plan to live to 100 would be to have them both wait until 70, and for Harry to take a spousal benefit at age 66. The reality is that they also have to weigh their ability to delay. If it means sticking it out in a job they loath than they can't stand, or using up the cash reserves they have saved up than they might not have any money left over to give to heirs or use in an emergency.

 

 

Still Can't Choose?

Finding your breakeven point, optimal filing strategy and comparing your options can be easy. If you bring in you social security statement, we can prepare a customized analysis to help you make a decision based on your options. We would be glad to help. Simply call or send us a message.

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