Is Social Security taxed? Up to 85% of your benefits may be. If your provisional income is above $25,000 as a single filer or $32,000 as a joint filer, you may owe taxes. Chuck Kennedy / Wikimedia Commons / Public Domain. The White House Entrance Hall as seen from the North Portico is a large formal space with pink and white marble with furnishings that include a French pier table purchased by Monroe in 1817, a pair of French settees with carved mahogany swans' heads and Aaron Shikler's portrait of John F.
May 18, 2020 ArmadniGeneral / Wikimedia Commons / CC BY-SA 3.0. Understanding how the many parts of a computer connect to each other inside your PC begins with the case, which physically houses most of the components.
- As such, deciding when to take Social Security is an important decision! This online Social Security Calculator will help you choose when to take Social Security benefits. Find out if it is better to start Social Security at 62 or 66 or at some other time. Other Social Security Resources: Overview of Social Security.
- Social Security benefits are paid the month after they are due. If you tell us you want your benefits to start in May, you will receive your first benefit check in June. (If you want to receive your first benefit check in May, you need to be eligible for benefits in April AND tell us.
Deciding when to take Social Security retirement benefits is important because it can directly affect your benefit amount. While you can technically start taking benefits as early as 62, you'd receive them at a reduced amount. On the other hand, you could delay taking benefits up to age 70. Calculating your Social Security break-even age can help you decide when the best time is to begin taking benefits. You can do that using a Social Security break-even calculator. Additionally, it may behoove you to consult with a financial advisor about when it's best for your particular situation to begin receiving Social Security benefits.
Social Security Break-Even Age, Definition
Your Social Security break-even age represents, in theory, the ideal point in time to apply for benefits in order to maximize them.
Remember, you can begin taking your benefits at age 62 at a reduced amount. But by taking your benefits at this earlier age, you'll receive more Social Security checks over your lifetime assuming you reach your desired life expectancy.
On the other hand, delaying your benefits past full retirement age increases them year over year until you reach age 70. Currently, the full retirement age for most people is either 66 or 67 years old, based on Social Security Administration guidelines. If you wait until age 70 to start claiming your benefits, you'd receive 132% of your regular monthly benefit amount. So the trade-off is receiving fewer checks from Social Security but the ones you do get would be larger.
Your break-even age is the point at which you'd come out ahead by delaying Social Security benefits. Your actual Social Security break-even age can depend on the amount of benefits you're eligible to receive, your tax situation and things like how inflation might affect the purchasing power of your benefits.
How a Social Security Break-Even Calculator Works
Figuring out the right time to start taking Social Security benefits isn't always a straightforward process. How to use midi in logic pro x. A Social Security break-even calculator can help you get some perspective on the numbers so you know what you stand to gain or lose by taking benefits earlier versus later.
Social Security break-even calculators help you find the best age to start taking retirement benefits. They do this by comparing your cumulative Social Security retirement benefits paid at age 62, your full retirement age and at age 70 and estimating how long it would take the benefits paid at age 70 to break even with benefits paid starting at age 62.
Here's a simple calculation to give you an idea of how a Social Security break-even calculator works. Say that you have the option to begin receiving $1,200 a month in benefits at age 62. You'd receive $1,700 in benefits if you wait until full retirement age at 66. Or you could receive $2,200 a month in benefits by delaying them until age 70.
The break-even point represents when the cumulative benefits even out. So if you wait until age 70 to start taking benefits, it would take you until age 79 to break even with the benefit amount you'd receive if you started taking them at age 62. If you were to start receiving benefits at age 66, it would take you until age 75 to break even with the benefits you'd receive if you started them at 62.
What a Social Security Break-Even Calculator Tells You
In a nutshell, a Social Security break-even calculator can tell you when the best age is to start taking Social security benefits, in terms of how much money you could expect to receive over time. Going back to the previous example, let's assume that you track your benefit amounts over a 10-year, 20-year and 30-year period. Here's how your total benefits received would look over each of those periods, for all three starting points.
Your cumulative benefits after 10 years:
- $144,000, starting at age 62
- $122,400, starting at age 66
- $52,800, starting at age 70
Your cumulative benefits after 20 years:
- $288,000, starting at age 62
- $326,400, starting at age 66
- $316,800, starting at age 70
How to resize an image in preview. Your cumulative benefits after 30 years:
- $432,000, starting at age 62
- $530,400, starting at age 66
- $580,800, starting at age 70
You can see that you'd draw the most Social Security benefits in total if you wait until age 70 to start taking them, assuming you live to age 100. But that could be a big 'if' when you're not in the best health.
What you have to keep in mind when using a Social Security break-even calculator is that the numbers are hypothetical. They don't take into things that could affect your ability to draw benefits or how far those benefits might go, such as:
- Future cost of living adjustments to Social Security benefits
- Your life expectancy and health status
- How much tax you'll owe, if anything, on those benefits
- Changes to the inflation rate
These calculators also don't factor in the amount of benefits your surviving spouse might receive if you were to pass away.
Deciding When to Take Social Security Benefits
A Social Security break-even calculator can be a good starting point for deciding when to take Social Security benefits. You can also use a Social Security benefits calculator to estimate how much you'll receive at age 62, 66 or age 70.
Beyond that, however, consider the bigger picture and how things like changes to your health or rising inflation might affect your timing. Also, think about whether you plan to continue working in some capacity while receiving Social Security benefits.
That could reduce your benefit amount, make some of your benefits taxable or both. If you earn income above certain thresholds your Social Security benefits could be reduced and you may owe income tax on them as well. That can shrink how far those benefits go in covering your expenses if you're only semi-retired.
Also, consider other assets you can draw on for retirement income when trying to time Social Security benefits. If you have a 401(k) or pension at work, an individual retirement account, an annuity, a taxable brokerage account, savings accounts, certificates of deposit (CDs) or all of the above, those can also affect when you decide to take Social Security.
The Bottom Line
A Social Security break-even calculator can be a helpful tool for Social Security planning. But it's not the only one you can use to figure out when to take benefits. Keeping your estimated cost of living and expenses in mind, as well as your overall health and life expectancy can help you make the best decision about when to time Social Security.
Tips on Retirement
- Consider talking to a financial advisor about when it makes the most sense to take Social Security benefits. If you don't have a financial advisor yet, finding one doesn't have to be difficult. SmartAsset's financial advisor matching tool can help you connect with professional advisors in your local area. It takes just a few minutes to get your personalized advisor recommendations online. If you're ready, get started now.
- A Social Security calculator can give you a good idea of what you will receive once you retire. Also, keep in mind that an annuity can give you a guaranteed income stream in retirement, which could allow you to delay taking Social Security benefits and therefore maximize your benefit.
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Withdrawing Your Social Security Retirement Application
Unexpected life changes may occur after you apply for Social Security retirement benefits.
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If you change your mind about starting your benefits, you can cancel your application for up to 12 months after you became entitled to retirement benefits. This process is called a withdrawal. You can reapply later.
If you cannot withdraw your application and you have reached full retirement age but are not yet 70, you can ask us to suspend benefit payments.
Learn more about:
What Happens When You Withdraw Your Application
There are a few things to know before deciding to withdraw your application.
- Anyone else who receives benefits based on your application must consent in writing to the withdrawal.
- You must repay all the benefits you and your family received from your retirement application. This includes:
- Benefits your spouse or children received, whether they live with you or not.
- Money withheld from your Social Security retirement checks for:
- Medicare Part B, Part C, and Part D premiums.
- Voluntary tax withholding (VTW) of federal income taxes for closed tax years. Contact the Internal Revenue Service (IRS) or your tax advisor about any tax implications.
- Garnishments.
- If you are already entitled to Medicare, you may choose to also withdraw your Medicare coverage.
If you are also entitled to railroad or veterans benefits, you should check with the Railroad Retirement Board (RRB) and the Department of Veterans Affairs (VA) about how your withdrawal affects those benefits. The RRB and the VA make their own determinations and are responsible for their own programs.
Withdrawing Both Social Security and Medicare Benefits
There is additional information to consider if you also withdraw your Medicare coverage.
- You must repay all Medicare Part A benefits paid on your behalf.
- Your Medicare Part B coverage is treated as a voluntary termination. You will have Part B coverage for the month you requested the withdrawal and the next month.
- If you file for benefits and Medicare again later, your Part B premiums may be higher due to your late enrollment.
Withdrawing from Medicare Part A or Medicare Part B can also affect your coverage under a Medicare Advantage plan (previously known as Part C) and Medicare Part D (Medicare prescription drug coverage).
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- Your Medicare Advantage enrollment will automatically end if you withdraw from Medicare Part A, Part B, or both.
- You will no longer be eligible for Medicare Part D if you withdraw from Medicare Part A and Part B. You will pay a penalty if you enroll in Medicare Part D in the future.
- If you keep Part A or Part B, you are still eligible for Medicare Part D.
The Centers for Medicare & Medicaid Services (CMS) will handle your future bills for Part B premiums if you decide to keep that coverage. You can choose to pay the bill automatically from your bank or financial institution.
You may need to have a personal interview if you want to terminate Part B. Learn more about terminating Medicare Part B.
Information for TRICARE Beneficiaries
If you have TRICARE and your withdrawal includes your Medicare Part A coverage, you may lose your TRICARE coverage. If you do not withdraw your Medicare Part A coverage, you may need to stay enrolled in Medicare Part B to keep your TRICARE coverage. For more information, visit TRICARE's Beneficiaries Eligible for TRICARE and Medicare.
How to Withdraw Your Application
- Fill out Social Security Form SSA-521. Include the reason why you want to withdraw the application on the form. If you already have Medicare, your request must also clearly state whether your Medicare coverage should or should not be included in the withdrawal.
- Send the completed form to your local Social Security office. We will notify you when there is a decision about your request and let you know the amount of benefits you need to repay.
You have 60 days to cancel an approved withdrawal. After that, you will lose any possible entitlement for the period covered by your original application.
