Answering the question, “How long will I live?” can help Social Security beneficiaries to make sound decisions about when to request their Social Security benefits.
It’s difficult to think about death. No one wants to think about their own, or a loved one’s, demise. However, retirement planning requires each person to consider life expectancy in order to make sound decisions about financial security. Use the SSA.gov actuarial life table and the Calculators: Life Expectancy page to make an educated guess about life expectancy.
Social Security Life Expectancy
In broad terms, SSA projects that men alive on their 60th birthday have a 75 percent probability of living until age 74 and a 50 percent probability of living to their 82nd birthday. In comparison, women alive at age 60 have about 75 percent probability of celebrating their 77th birthday and a 50 percent chance of living until age 86.
Other factors, such as chronic conditions like diabetes, heart disease, smoking and respiratory disease, cancer, and vascular disease affect how long a man or woman lives. Any chronic health problems you have now, or a family history of certain health issues, should be factored into life expectancy. Chronic serious illnesses can shorten your life span.
If you or a loved one already has a serious or known health risk, requesting Social Security benefits earlier than your Social Security retirement age. If your doctor says you or a loved one are in glowing health, it’s also possible you will live longer than the average man or woman.
Life Expectancy and Income
SSA research also says that individuals in the upper half of income distribution are likely to live about six years longer than a person in the lower half. If you earn more money now, it’s quite possible that you will live longer than the average person your age.
Couples should consider which member is likely to live the longer of the two. According to Social Security statistics, there’s a 50 percent probability that one individual will live to age 92. For those in upper income brackets, the probability of one individual in the upper income union will live into their 90s is higher than 50 percent.
Social Security Full Retirement Age and Retirement Benefits
If you’re healthy and waiting until Social Security full retirement age for your birth year, it may make good financial sense for you to delay claiming your Social Security retirement benefits. Your monthly benefit can increase as much as 76 percent if you wait to claim SSA benefits at age 70 vs. early retirement benefits at age 62.
Let’s consider SSA’s break-even age analysis. Break-even age is the age at which you may benefit from delaying your request for Social Security benefits. In addition, break-even age is the age at which higher monthly benefits at a later time make up for lack of benefit cash flow today. For most Americans, break-even age may vary between your 77th and 84th birthdays:
If you’re healthy and female, delaying your request for Social Security benefits may be a good financial decision.
If your life expectancy according to Social Security actuarial tables is 86 and your break-even age is 84, you chances of getting two more years of higher Social Security monthly benefits is better than 50 percent.
It’s also important to consider how Social Security calculates survivor’s benefits. If your partner in marriage predeceases you, SSA says the survivor spouse may receive the higher SSA retirement benefit. If your deceased spouse earned a higher benefit, you’ll receive his or her monthly benefit.
SSA’s configuration of survivor benefits means you can increase retirement benefits as a couple by considering your health, income, and life expectancy and earn more income as a surviving spouse.
Naturally, analysis that’s based on individual health and income factors doesn’t consider joint probabilities of increased life expectancy or claiming options available to married people. The break-even analysis for an individual considers the cost of delaying SSA retirement benefits as the largest cost factor.
Married people can opt to use “file and suspend” or SSA’s “restricted application” strategies wherein one partner of the couple receives his or her spousal benefits at full retirement age (66 for those retiring today).
For instance, a couple considering retirement benefits are the same age today. Partner A’s SSA full retirement benefit is USD 2,000 and Partner B’s is USD 1,500:
If Partner A uses the file and suspend option, Partner B receives spousal benefits prior to claiming personal retirement benefits at age 70.
The couple is able to reduce their break-even age about four years (from about 84 to lower than 80 years)
After the couple turns 80, they’ll receive monthly retirement benefits about 32 percent higher than if both had made the decision to claim benefits at age 66.
This couple made a good financial decision to delay the start of SSA retirement benefits.
Life Expectancy and Social Security Retirement Benefits
Of course, the truth of the matter is that no one knows how long he or she will live. Whether you’ll live to old age or die earlier than most isn’t fully in your hands. Deciding when to request Social Security retirement benefits is all about using the information available from Social Security Administration and your best judgment.