As retirement draws nearer, it’s crucial to think about how long your savings and Social Security benefits need to last. One of the most useful tools to help with this planning is the Social Security Administration’s (SSA) Life Expectancy Calculator.
This free, easy-to-use tool can provide valuable insights into how long you might live, based on statistical averages, which can help guide your retirement decisions.
What is the SSA Life Expectancy Calculator?
The SSA’s Life Expectancy Calculator is a simple online tool that estimates how many additional years you may live. To use it, all you need to do is enter your birthdate and sex.
Based on this information, the calculator uses data from actuarial life tables that reflect the mortality rates of millions of Americans to provide a prediction of your life expectancy.
For example, if you are a 65-year-old man, the calculator might estimate you’ll live another 15 years on average. Meanwhile, a 65-year-old woman might expect to live about 18 more years.
While these are just averages and don’t take into account your personal health or family history, they give a solid starting point for retirement planning.
How Can the Calculator Affect Your Retirement Strategy?
Knowing your life expectancy can significantly impact your decision about when to begin collecting Social Security benefits. Here’s how it can influence your strategy:
Early Claiming (Age 62): You can start receiving Social Security benefits as early as age 62, but doing so will reduce your monthly payments.
Full Retirement Age (FRA): If you wait until your full retirement age (which is between 66 and 67, depending on your birth year), you’ll receive your standard benefit amount.
Delaying Until Age 70: Delaying benefits until age 70 increases your monthly benefit by 8% each year you wait beyond your FRA. This can add up to a significantly larger monthly check in the future.
If your life expectancy is likely to be longer, based on the SSA’s estimate, you may decide that waiting until age 70 will maximize your total lifetime Social Security payments. On the other hand, if your expected lifespan is shorter, it might be smarter to start collecting benefits earlier to receive more money in the short term.
For example, imagine you’re 60 years old and wondering when to claim your benefits. If the calculator shows that your life expectancy stretches into your 80s or 90s, you might choose to wait until age 70 to boost your monthly payments.
This kind of decision can help you balance your lifetime earnings and ensure that you don’t run out of money too soon.
Using the Calculator for Broader Financial Planning
The SSA’s Life Expectancy Calculator doesn’t just impact decisions about when to take Social Security. It can also be a helpful guide for overall financial planning during retirement.
Knowing that you might need to plan for 20 to 30 years of retirement can help you adjust your investment strategy, determine how much you can safely withdraw from your savings, and estimate costs for healthcare and long-term care.
Many retirees underestimate how long they will live, which can lead to depleting their funds too quickly. By using this calculator, you can plan for a longer retirement and avoid the risk of running out of money.
The SSA Life Expectancy Calculator is a powerful tool that can help you plan for a successful retirement. By estimating how long you might live, it provides important context for making informed decisions about when to start collecting Social Security, how to structure your savings, and how to ensure you have enough to last through retirement.
While life expectancy is just an estimate and not a guarantee, it’s a useful starting point for making important financial decisions.
