Online Social Security Estimator

If you're wondering when to take Social Security benefits, help just arrived in the form of a nice addition to the Social Security Administration's interaction with the baby boomer: a new online calculator for estimating your personal retirement benefits.

The Retirement Estimator asks you to enter your name, Social Security number and a few other pieces of personal data, and from that produces estimates that are based on your actual Social Security earnings record. But be aware that retirement estimates are estimates. They may vary, if not much, from the actual benefit you may receive in the future because:

• Your Social Security earnings record is constantly being updated;
• The SSA calculators use different parameters and assumptions (e.g., different stop work ages, future earnings projections, etc.); and
• Your actual future benefit will be adjusted for inflation.

The good thing is that you don't have to enter years of earnings history. This data is already in the calculator's database. (You will, however, have to enter your 2007 income.)

This tool also allows you to play around with retirement scenarios to see what you'd get from Social Security depending on the age at which you decide to retire. So it beats the annual statement the government sends you.

One caveat: If you expect to retire years down the road, you need to estimate your future average annual earnings to get an accurate picture of your Social Security benefits. So, the closer you are to actual retirement, the more accurate the estimate will be.

In choosing when to retire, says Jean Setzfand, director of financial security for AARP, it is important to have a realistic picture of your finances and the cost of living. "This gives you a good gauge," she says.