Social Security & Early Retirement 2021: Know Your Bend Points!

Each year, I update this Social Security article, gauging my progress and potential future benefit as I approach the second bend point. We’ll get to what that means shortly, but I’m happy to report that I’m one year away from reaching that hump.

The figures and data that follows have been updated for 2021, and the Social Security projection spreadsheet, which you can download for free, has been updated with all new indexing factors.

Note that the results are your projected benefit in today’s dollars (present value). Your future benefit will rise with inflation each year, preserving your spending power.

If the calculator suggests you’ll have a monthly benefit of $2,000 and your 2 to 3 decades away from collecting, you can assume your benefit by then will roughly double in number, assuming inflation averages something near the historical rate of around 3%.

While we may notice how much we kick in ($17,707.20 for me as a self-employed individual in 2021), those of us planning to retire early tend to largely ignore it when calculating safe withdrawal rates and our annual cashflow. If we mention it all, it’s usually with an asterisk because the payday is so far off and somewhat uncertain.

In all likelihood, some money will be there for us. The calculations may be different than they are today, but that’s true anytime we make projections based on current tax code, and that’s something we do a lot.

While we don’t know which way it will go, and it’s quite alright to plan as if it doesn’t exist (better safe than sorry), the reality is that Social Security will quite likely be a benefit to many of us in the latter portion of our early retirement.

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