How to Factor Social Security into Your Safe Withdrawal Rate

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How to Factor Social Security into Your Safe Withdrawal Rate

The best time to file for Social Security depends on the ages and income histories of both husband and wife. That being said, filing for Social Security at age 70 or at least after age 66 is usually best.

For those who retire earlier, these gap years between your last paycheck and your first Social Security check can be difficult. To weather those five or more years, you will need to withdraw from your savings, but this begs the question, how much should you take out?

Our previously written article on “Safe Withdrawal Rates” provides most of the answer. However, that calculation does not include your Social Security benefits. Factoring those benefits is complex but the extra dollars it provides you for the gap years can be significant.

Here is how you can do the calculation to pull the future benefits of Social Security forward while still filing for Social Security late.

1. Acquire your estimated Social Security benefit sheet.

You can do this at any time by submitting a request for a Social Security Statement.

2. Determine your ideal filing age.

You can do this using online Social Security optimization tools or you can assume age 70, especially if you are single.

3. Calculate your monthly benefit at your ideal filing age.

To do this, take your benefit at full retirement age from your Social Security Statement and multiple times the modifier from the table below:

Age Modifier
70  1.320
69  1.240
68  1.160
67  1.080
66  1.000
65  0.933
64  0.867
63  0.800
62  0.750

For example, if your benefit was $2,000 per month at full retirement age, your age 70 benefit would be $2,640 per month ($2,000 * 1.320).

4. Adjust the estimated benefit by underreported inflation and stretch the adjusted benefit to your desired retirement age.

Social Security is indexed to the official inflation numbers, but the CPI index normally understates the actual inflation experienced by retirees by 1% annually. As a result, the next step is to discount the amount of future Social Security payments by 1% per year.

Then, take this inflation-adjusted benefit and determine how much you can advance to your desired retirement age from your savings such that later when you file for Social Security, your future investment growth and retirements benefits will supplement your withdrawals.

To save time on this calculation, you can do this step by looking up your ideal filing age and desired retirement age in the table below to return the percentage of your ideal filing age benefits which you can add to your safe withdrawal rate starting at your desired retirement age.

Retirement Age Filing Age
66 67 68 69 70
50 38.34% 36.35% 34.44% 32.61% 30.85%
51 40.23% 38.15% 36.14% 34.22% 32.37%
52 42.23% 40.04% 37.94% 35.92% 33.98%
53 44.34% 42.05% 39.84% 37.72% 35.68%
54 46.58% 44.17% 41.85% 39.62% 37.48%
55 48.95% 46.42% 43.98% 41.64% 39.39%
56 51.46% 48.80% 46.24% 43.77% 41.41%
57 54.13% 51.32% 48.63% 46.04% 43.55%
58 56.95% 54.00% 51.17% 48.44% 45.83%
59 59.95% 56.85% 53.87% 51.00% 48.24%
60 63.15% 59.88% 56.73% 53.71% 50.81%
61 66.54% 63.10% 59.79% 56.60% 53.54%
62 70.16% 66.53% 63.04% 59.68% 56.46%
63 74.02% 70.19% 66.51% 62.96% 59.56%
64 78.14% 74.10% 70.21% 66.47% 62.88%
65 82.55% 78.27% 74.17% 70.22% 66.42%
66 87.26% 82.74% 78.40% 74.23% 70.21%
67 87.53% 87.53% 82.94% 78.52% 74.28%
68 87.81% 87.81% 87.81% 83.14% 78.64%
69 88.10% 88.10% 88.10% 88.10% 83.33%
70 88.38% 88.38% 88.38% 88.38% 88.38%

For more filing or retirement ages, contact us and request them. These numbers are generated assuming a 3% investment return over real inflation.

5. Sum your safe withdrawal rate and stretched social security benefits.

The last step is to add together your safe withdrawal rate from your retirement savings and this newly calculated percentage of your ideal filing age benefit. The result is your early retirement safe withdrawal rate.

As a result of these calculations, even at age 70 we suggest that you spend 88.38% of your monthly check and save and invest the remainder to cover future years when your CPI Index increase doesn’t quite cover your actual expenses.


If you are younger than age 65, the projection on the Social Security Statement is likely incorrect. The statement assumes that you will be working at your current salary through age 65. If you are trying to retire earlier, then the benefit may be overestimated. That being said, if you are likely to receive substantial salary increases, then the benefit may be underestimated.

If you are concerned about overestimation, do the following:

1. Look at Your Earnings Record on your Social Security Statement and total 35 years of earnings, using zeros for years where you won’t have worked at least 35 years because you are retiring early.

2. Divide by 35 to get your average earnings per year.

3. Put your average earnings per year in the “earnings in the current year” field of the Social Security Quick Calculator. (Use the “today’s dollars” setting.)

The resulting page will show you an alternate estimated benefit for full retirement age to utilize in the above described calculations.


Imagine someone who could receive $24,000 a year at age 66, the full retirement age.

They want to retire early at age 62, and they are tempted to start receiving their Social Security benefits early as well. At age 62 the Social Security modifier is 0.75 and their annual Social Security benefit would only be $18,000. Discounted to 86.22% for a 1% lower growth than inflation and we would recommend only spending $15,520.

Compare that with retiring at age 62 but continuing to let your Social Security grow until age 70. At age 70 the Social Security modifier is 1.32 and their annual Social Security benefit would be $31,680. Pulling that benefit forward to age 62 and adjusting for a 1% lower growth than inflation discounts that amount to 56.46%. This would result in an annual spending of $17,885 or a standard of living 15.24% greater than if you took Social Security benefits early.

Carefully computing and adding your Social Security early retirement safe withdrawal rate can safely boost your early retirement standard of living without jeopardizing your future finances.

Photo used here under Flickr Creative Commons.

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David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818…)

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