How the math works

Social Security Optimizer

Evaluates claim ages 62 to 70 in one-year increments. For each candidate age, calculates lifetime benefits paid through assumed life expectancy, then discounts future cash flows to present value at the user-selected discount rate. The optimal claim age maximizes Net Present Value (NPV).

Benefit reduction and credit factors

• Early claim (before FRA): benefit reduced 5/9 of 1% per month for first 36 months, 5/12 of 1% per month thereafter (SSA POMS RS 00615.105).
• Delayed credits (FRA to age 70): 8% per year for those born 1943 or later.
• COLA: applied annually to all benefits. Default 2.4% (long-run average).

Spousal and survivor benefits

• Spousal: max of own benefit or 50% of higher earner's PIA, reduced for early claim, no delayed credits past spouse's FRA.
• Survivor: 100% of deceased spouse's benefit including any delayed credits earned, available from age 60.

Retirement Income Sequencer

Year-by-year withdrawal simulation across Traditional, Roth, taxable, and HSA accounts. Two strategies are compared: Naive (proportional draw across accounts) versus Optimized (tax-aware sequencing with Roth conversion ladder).

Optimized sequence rules

1. Pre-RMD: draw taxable first to fill up to top of 12% bracket, then Roth above.
2. Roth conversion ladder: convert Traditional dollars to Roth each year up to top of current bracket while ordinary income is low.
3. Post-RMD: take RMD from Traditional first (forced), then taxable, then Roth as needed.
4. HSA: medical-only until 65, treated as Traditional thereafter.

Tax model

• Federal: 2024 single-filer brackets and standard deduction. Marginal rate applied to ordinary income (Traditional withdrawals plus Roth conversions).
• State: flat rate applied to ordinary income and LTCG.
• LTCG: blended rate applied to gain portion of taxable withdrawals (gain = withdrawal × (value − basis) / value).
• RMD divisors: IRS Uniform Lifetime Table.

The 8th Wonder

Compound growth simulation with monthly compounding and a comparison against two delayed-start scenarios (5 and 10 years). Optionally projects real (inflation-adjusted) value alongside nominal.

Compound formula

monthlyRate = (1 + annualReturn)^1/12 − 1

balance_m = balance_m−1 × (1 + monthlyRate) + monthlyContribution

realBalance_y = balance_y / (1 + inflation)^y

US median preset sources

• Median income by age bracket: Bureau of Labor Statistics, 2023 wage data.
• Recommended savings rate: 15% (combined employer + employee) per most financial planning standards.
• Median 401(k) balance by age: Fidelity Retirement Insights, 2024.
• US average Social Security benefit at FRA: $1,907/month, SSA 2024.

Disclaimer

This site is an analytical aid. It is not investment, tax, or legal advice. Tax law changes annually and your situation likely has nuances these simplified models cannot capture. Use the output to inform conversations with a qualified Certified Financial Planner or tax professional.