When to claim Social Security is one of the most important decisions retirees can make. Many websites offer free estimates of how much you may receive depending on what age you decide to take benefits.
Researchers from the Social Security Administration reviewed six popular online tools to compare their estimates of what you may receive when you claim at the earliest possible age of 62, your full retirement age and at age 70, which usually maximizes your benefits.
Results from the free calculators were similar, but some differed by hundreds of dollars per month in the test cases. Generally, the more complicated the financial situation, the worse these freebies performed.
Here are pros and cons for each tool, according to SSA researchers Patricia Martin and Dale Kintzel:
AARP's Social Security Benefits Calculator had nearly 1 million visits last year.
Pros: The tool allows users to enter their spousal information, which is key when married couples make claiming decisions.
Cons: Users can't change the calculator's underlying inflation and salary growth assumptions. AARP also has default claiming age of 70. "This is because AARP encourages people to maximize their benefits by waiting as long as they can to claim them," said Jean Setzfand, AARP's senior vice president.
Bankrate licenses its Social Security Calculator from Dinkytown, a Minneapolis company that has created more than 400 online financial tools used by thousands of websites.
Pros: Users can view their information on the calculator's single page and edit future salary and inflation rate assumptions. Unlike the other tools, users don't have to fill out all the questions to receive a sample result.
Cons: The tool doesn't allow users to enter financial information for a working spouse. As with some other calculators, the SSA researchers found that the tool doesn't give accurate estimates for younger workers or ones with uneven earnings.
Center for Retirement Research
The Target Your Retirement tool from Boston College's Center for Retirement Research considers income from Social Security as well as from personal savings and employer-sponsored retirement plans.
Pros: The calculator takes a broader approach to retirement savings than other tools. It illustrates how users can increase their savings and retirement plan contributions to improve their overall financial security beyond Social Security claiming strategies.
Cons: A better snapshot of your retirement savings comes with a trade-off. The calculator requires users to put in more information than the other tools reviewed.
Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau created a Planning for Retirement tool in November 2015.
Pros: The CFPB calculator keeps it simple by requiring you only to give your date of birth and highest annual work income to start. Then you answer five questions about your expected retirement age, income sources, longevity, marital status and spending habits. The tool also suggests users create a My Social Security account, which allows you to verify your annual earnings and the taxes you paid for Social Security and Medicare benefits with the SSA.
Cons: The simplicity comes at a cost. SSA researchers found that the tool doesn't provide accurate benefit estimates for workers still early in their careers or those with sporadic work histories.
Financial Engines, an investment advice company focused on employer-sponsored retirement plans, offers the Social Security Retirement Calculator for free to anyone.
Pros: Users can compare Social Security claiming strategies under different martial and survivor scenarios. The calculator offers a specific date for claiming Social Security that would maximize lifetime retirement benefits. "Financial Engines believes that the more information people have and the more easily they can see the trade-offs on different strategies, the better they will be able to make the right choice for their unique situation," said Christopher Jones, Financial Engines' chief investment officer.
Cons: Benefit amounts are given in annual and lifetime terms, but not monthly totals like most calculators. The tool also assumes that future work income will grow at a constant rate.
Social Security Administration
Retirement Estimator is one of 11 online calculators available on the SSA's website.
Pros: Retirement Estimator uses a person's actual earnings history by incorporating information from the Social Security earnings record in its calculations. The simple calculator also allows the user to compare what happens if he or she retires at different ages.
Cons: The tool does not capture other retirement income, such as from a 401(k) plan, nor does it distinguish between claiming decisions for single people and married couples.
The bottom line
These free tools may be a good start, especially for people with straightforward work histories and retirement plans.
But life is usually messier than these calculators can accommodate. If you have a complex situation, you may want to seek more guidance from a financial advisor.
Do-it-yourself types may want to use more sophisticated calculators, such as those from Maximize My Social Security and Social Security Solutions. These tools range in price from $20 to $50, depending on what features you want.