For the US, how to calculate the Social Security benefits if I stop working at 60 or 62 but claim benefits at 70?

As related to this question and the calculator at ssa.gov, they tend to say: stop working at 62 and start claiming benefits at 62, or stop working at 70 and start claiming benefits at 70.

However, what if I stop working at 62, and start claiming benefits at 70? Should I just mark it as stop working at 62 and start claiming benefits at 62, but then, add 8% per year for 8 years (62 to 70), and about 3% inflation per year, meaning it is about 8 x 8% + 8 x 3% = 64% + 24% = 88% to the age 62 number, and assume that it is the number I get if I claim at 70 and will receive that for as long as I live, with a 3% inflation adjustment per year?

That's because I feel a bit horrified if I have to work from age 62 to 70... imagine interviewing at 65 and competing with all the candidates who are 28, 35, 38, or even 45.

Or what if we stop working at age 59 or 60, and start claiming benefits at 70? That calculator seems to use age 62 for stop working even if you enter an age under 62, and assume there is income in between that and 62.

• If you don't want to work after age 62 (which is about where I quit), then adjust your savings to cover the gap, if you can. Not everyone can. Commented May 28, 2023 at 4:55
• @keshlam: you mean Medicare (for retired/elderly or totally disabled) not Medicaid (for poor). Also for completeness (though probably not affecting this Q) "unless you are on and allowed to remain on an employer plan, in which case you can wait until employer coverage ends to enroll in Medicare". Commented May 31, 2023 at 2:57
• (Thanks, I keep doing that.) While on the topic, remember that you REALLY REALLY REALLY want to start Medicare at age 65 (though the system will let you register a bit earlier or later and Do The Right Thing.) There's a serious penalty for missing the registration window. Employer coverage may be an It Depends; I think mine would have wanted to drop into being something more like a Medicare Plus plan where Medicare is actually the primary unsure. Commented May 31, 2023 at 5:43

The answer is there on the site, but in brief: The earliest you can take social security is age 62. If you wait, then up to age 70, as you say, you're effectively getting a guaranteed (but see below) 8% growth on the money. That is a pretty good deal compared to other places to park the cash.

On the other hand, delaying may mean you wind up getting less money total, depending on exactly when you die. Which might affect how much you eventually leave to your heirs. So this depends in part on your guess at what your life expectancy is. Also, if certain politicians have their way, social security may yet be at risk; if you're concerned about it being cut, you might want to start it sooner. Or might not.

And of course your cash flow needs, and what's happening with your other savings, play into that choice.

Common default advice is to start payments when, or a bit before, you are actually going to need that income, or at 70 if you haven't already done so. But this winds up being a personal decision, based on your own needs and expectations.

Note that when you stop working has no direct effect on the formula... except that, since you're presumably now earning a higher salary, you're pushing lower-pay years out of the "ten best" list and increasing the payout that way, so it may help to continue working. Plus, of course, that gives you more years to build up savings to live on in retirement; social security alone probably won't do it.

• "8% growth...is a pretty good deal compared to other places to park the cash. On the other hand, delaying may mean you wind up getting less money total" -- you can't compare 8% return directly to other investments because the time for which you receive the higher SS payment is shorter. If you wait until 70, you are guaranteed to receive payments, if at all, for 8 fewer years than if you started at 62. Investing your own money would allow you to spend a higher percentage annually if you wait, in addition to the investment return. SS is presumably calibrated so it's a wash on average. Commented May 28, 2023 at 20:48
• > Or what if we stop working at age 59 or 60, and start claiming benefits at 70? That calculator seems to use age 62 for stop working even if you enter an age under 62, and assume there is income in between that and 62. Commented May 29, 2023 at 12:09
• Number of years worked doesn't directly affect payments. See ssa.gov/oact/cola/Benefits.html. Commented May 29, 2023 at 13:17
• @nanoman: I believe that's already covered by the questions of life expectancy and of whether you have alternative funds to draw on. If you were getting a guaranteed 8% from your other investments, it wouldn't much matter which you draw except in how it affects your estate. Usually you aren't. Also note that the "calibration", because it factors in life expectancy, is more like an annuity purchase than an investment. Commented May 29, 2023 at 16:19
• @keshlam "except in how it affects your estate" -- that's a giant caveat. The amount available to spend in retirement can be quite different if you are planning to leave an inheritance. An apples-to-apples comparison would indeed be annuity-based. Each year you delay SS, your annual income until death increases 8%, but the total present value of that income increases less than 8% (reduced remaining life expectancy). ... Commented May 29, 2023 at 22:14