All you have to do is Google the phrase “When is the best age to take Social Security?” and you’ll get endless advice on the perfect timing for taking Social Security, even though not one single advice-giver knows anything about you.

As a financial advisor who plans for people every day, it isn’t really that easy a decision; nor is there an exact science to follow because every individual’s situation is different. For example, all of these questions — and more — can factor into the decision on timing:

  • Are you married?

  • How much older or younger is your spouse?

  • Are your expected Social Security benefits higher or lower than your spouse’s?

  • Are you still working?

  • Do you plan to work while you’re retired?

  • Do you need the Social Security income?

  • How healthy are you?

  • What is the short-term effect of taking it at 62, and what are the long-term effects of waiting?

  • Do you like to gamble? (I’ll explain that shortly.)

In order to better discuss the issues, let’s assume that our example client is born in 1960. Full Social Security benefits start at age 67 for those born in 1960 or later. At the current age of 56, our client is not eligible for benefits until age 62 at the earliest, but will not get full benefits until age 67. Let’s further assume the client’s historic earnings created a full retirement Social Security benefit of $2,500 per month at the age of 67. Therefore, the details in Figure 1 (below) represent our client’s Social Security income breakdown, depending on the age at which they start taking SSI.

Social Security Income Breakdown

As Figure 1 shows, taking Social Security at age 62 triggers a life-long monthly reduction of 30%, as compared to taking it at age 67. However, starting at age 62 gives the client five full years of income, versus starting at age 67. Also, there is a clawback of early Social Security taken if the client is still working and earning FICA wages of more than $15,720 (for 2016). Any excess overage would reduce Social Security by $1 for every $3 earned above the $15,720.

Figure 2 shows the breakeven points for starting Social Security early, compared to waiting until full retirement age, in terms of total dollars received, assuming full benefits at age 67 of $2,500 a month.

Social Security Breakeven Analysis

Starting Social Security at age 62 or 63 (see the green cells in the table) usually means you have to live at least to age 77 before you start losing money (in total dollars received), compared to waiting until your full retirement age of 67 (also in green) in this example. And so on with each age, such as age 64 (blue), or age 65 (yellow), or age 65 (red), all shown in color code comparisons, against waiting till age 67 for starting Social Security. The far-left age column provides the breakeven point for when each option would start losing total money by starting early, versus waiting till age 67.

As mentioned previously, this choice is complex and definitely different for everyone, depending on their individual situation. Yet no matter the choices made, this decision is inevitably a gamble. If you take SSI at 62 and pass away before age 77, you win (financially, at least.) However, if you take SSI at 62 and live beyond age 77, you actually lose in terms of total dollars received. The flip is also true. If you wait until 67 to start taking SSI and live to be younger than 80, you actually lose; but if you take it at 67 and live past 80, you win in total dollars received.

The whole question of when to start taking Social Security really revolves around which “gamble” you want to take. Are you going to gamble on your age and ability to live a long life, or are you going to gamble on the probabilities of getting your money earlier in case you don’t live long enough?

Again, as mentioned above: This decision is complex and there’s no standard answer that easily applies to everyone looking to elect Social Security or retire. At the end of the day, it’s a gamble of a lifetime for everyone choosing, as no one knows if they’ll live longer or fall short of the above noted breakeven point in total dollars received. Here’s hoping we all make the right decision.

— Read Social Security Bill Would Raise Retirement Age, Slow COLAs on ThinkAdvisor.