One of the most important retirement decisions you will make is when to sign up for Social Security. Several retirement calculators have been developed to help you determine the optimal age to start Social Security payments. But these calculators often produce varying results for the same scenario due to slightly different underlying assumptions. For example, a 55-year-old woman with a $40,000 salary who plans to sign up for Social Security at her full retirement age of 67 would receive benefit estimates ranging from $1,141 using Bankrate's calculator to $1,512 with AARP's calculator, according to a recent analysis of six Social Security calculators by the Social Security Administration.
Nonetheless, these calculators can help you begin thinking about what you can do to maximize the amount you will receive from Social Security in retirement. Here are six Social Security calculators worth trying:
Retirement Estimator. The Social Security Administration's Retirement Estimator is the only calculator that uses your actual Social Security earnings record to provide a benefit estimate for three claiming ages: age 62, your full retirement age and 70. The estimate is likely to be the most accurate for people close to retirement who have a long earnings history. The tool allows you to adjust your future income and select alternative ages to stop working and examine how that changes the amount of you will receive from Social Security. However, the calculator does not take spousal benefits into account or make recommendations about the best age to claim. You also have to enter some personal information, including your Social Security number, to use the tool. You can only use the Retirement Estimator if you have enough credits to qualify for benefits but have not yet begun your Social Security payments.
Planning for Retirement. The Consumer Financial Protection Bureau's Planning for Retirement tool provides a rough estimate of your monthly or annual Social Security payments at various claiming ages based on your birth date and the highest annual salary you have earned. An interactive graph shows how claiming at ages 62 through 70 increases or decreases your monthly or annual payments and the lifetime amount you will receive by age 85. The site also provides personalized information about the role marital status, desired retirement age, spending expectations, other sources of retirement income and longevity can play in your claiming decision. However, since the tool doesn't use your actual earnings, the estimate is likely to be less accurate than the SSA's calculator, especially for young people or those with variable incomes.
Target Your Retirement. The Center for Retirement Research at Boston College's Target Your Retirement calculator is more comprehensive than other Social Security calculators. It takes into account the amount you will receive from Social Security, retirement savings and pensions to give you a more complete estimate of your total retirement income. The tool also accounts for lifestyle changes you could make to change your retirement income and expenses, including working longer, downsizing your home, taking out a reverse mortgage or finding other ways to reduce your retirement costs. "It's very difficult to know when to claim Social Security without considering how much you need in retirement and what you are going to get from other sources," says Steven Sass, a research economist for the Center for Retirement Research at Boston College. "If you don't have enough, you can adjust when you retire, which changes your Social Security benefit and reduces the amount you are going to need from savings." You can also factor in emergencies that might change your retirement income, such as a significant drop in the stock market or a spouse's death. An interactive chart helps you explore how factors such as working an extra year, moving to a less expensive home or a sudden drop in the stock market will change your retirement finances.
Social Security Benefits Calculator. The AARP Social Security Benefits Calculator allows you to input income for both you and a spouse at the same time and compare how much you will receive at various claiming ages to your likely retirement expenses. "With the use of a user-friendly, interactive slider, AARP's calculator shows the impact of your claiming age, estimates certain living expenses and shows how much your benefit would cover of them based on your claiming age," says Joshua Rosenblum, an AARP spokesperson for economic security. Another unique feature of the AARP calculator is a graph showing what happens to your benefit if you work and claim Social Security benefits at the same time.
Social Security Retirement Calculator. The Social Security Retirement Calculator created by the financial services company Financial Engines provides customized claiming strategies for married couples, including spousal and survivor's payments. "When out to maximize the benefits that both spouses collect, that's different than maximizing when each person claims their own benefit," says Wei-Yin Hu, vice president of financial research at Financial Engines. "It turns out to be quite important to look at both spouses in a household together, because there are some interesting interactions about when the two should claim benefits in terms of both spousal benefits and survivors benefits playing a role in the picture." In addition to examining how your annual payment changes based on the age you sign up, the tool also points you toward a claiming age that is likely to maximize the Social Security payments you receive over your lifetime. The calculator has been updated to include 2015 Social Security changes to spousal claiming rules and applies them automatically based on the date of birth you enter.
Social Security Calculator. Bankrate's simple Social Security Calculator provides a quick estimate of future Social Security benefits on a single page. Users can also create a customized report that explains the likely monthly and annual payout at various claiming ages and how this income compares to what they earned during their final year of work. The tool is best suited for individuals or married couples in which only one spouse works. The calculation needs to be run twice if each spouse will claim Social Security based on his or her own work record. The calculator also rounds the user's full retirement age to the nearest full year, even though retirees born in some years have a more specific retirement age, such as 66 and 6 months, which is likely to produce a slightly less accurate estimate, according to the SSA report.
It's important to note that none of these calculators can provide the exact dollar amount you will receive from the Social Security Administration in retirement. The SSA cautions that your actual benefit may differ from the estimate for a variety of reasons including fluctuating earnings, delayed retirement, inflation adjustments, legislative changes and the deduction of Medicare premiums from Social Security payments. However, these tools can give you an idea of how your payments will change if you delay claiming Social Security and coordinate benefits with a spouse.
Emily Brandon is the author of "Pensionless: The 10-Step Solution for a Stress-Free Retirement."
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