But the calculation is a little tricky to know whether you should elect to receive social security early.

## Social  Security Calculation

For example, if you could receive \$2,000 per month from age 62 or \$2,800 per month by waiting 5 years, which is a better choice?

For five years, you would receive \$24,000 per year, which amounts to \$120,000.

If you waited 5 years to receive the extra \$800 per month, it turns out that to get to breakeven on that \$120,000, you will be waiting an extra 12.5 years from the time you start receiving the higher amount (because you would receive an extra \$9,600 per year).

You should factor in that if you start drawing the higher amount at age 67, then it won’t be until you are almost age 80 that you will reach breakeven in terms of the total income received from social security.

If you believe that you will live beyond age 80, and you can financially afford to wait in order to receive the higher social security amount, it is generally wise.

However, if you have a family history of ill-health, you may elect to choose the lower amount sooner.

For now, let’s assume you take the \$2,000 per month, so you end up with an extra \$24,000 per year from social security.

When you combine the \$40,000 from your nest-egg earnings with the \$24,000 from social security, you end up with \$64,000 in annual income.

## How Can I Retire? Lower Your Tax Category

If the combined income from social security and earnings on savings and investments doesn’t quite get you over the line in terms of covering your annual costs, an x-factor that may help you retire could stem from an inheritance.

But you don’t want to rely on an inheritance to get you over the hump to retirement. Besides, you should explore other avenues first.

For example, your spouse may be eligible for social security benefits too, provided he or she has reached the eligible age of 62.

If you both receive \$24,000 in income per year from social security for a combined total of \$48,000 and add that to the \$40,000 earned from savings and investments, you would enjoy a gross income of \$88,000 per year without eating into your nest-egg.

Another factor that may be in your favor – which often flies under the radar in calculating when you can retire – is that your tax bill may be lower during your retirement years.

It is common for most people during retirement years to earn less income per year than when working full-time and so the amount you pay Uncle Sam will be lower.

What you care about is not so much your gross income as much as it is your net income or how much you take home after paying taxes.

You may even find that taking home less money overall during retirement years compared to when you were working full-time does not not significantly affect how much money you receive each month thanks to a lower tax rate.

## What If I Can’t Retire Yet?

If you do the math and discover that you can’t quite get over the hump in annual income from investments, savings, social security, and from a lower tax bill to offset your expenditures, then you have a few options.

The first step may be to lower your cost of living.

If you find yourself visiting the Starbucks each day and add up your total spending on entertainment and fun, you might be surprised at just how much could be squirreled away by eliminating some of those day-to-day costs.

Another possibility is to move from full-time to part-time work, which would allow you to draw less on your savings until you have accumulated enough money in your retirement accounts.

However, if you find that you are still a long way from being able to afford retirement, you may need to simply set a timeline goal to keep your sleeves rolled up and your head down at work for another few years until you can comfortably afford to give up the W-2 income once and for all.

## What Are The Next Steps?

Visit Personal Capital or Mint to get started calculating your spending. Once you have a good handle on your cost of living, you can figure out how much income you can earn from your assets.

The Personal Capital mobile app can connect all your bank and investment accounts, so it is easy to get a holistic view of your full financial situation.

With a clear idea of your spending, savings and investments, you can make more accurate income projections based on conservative income estimates.

For a complete financial picture that factors in your revised tax rate, consider speaking with a financial advisor or tax attorney, who can drill down into your budget and gauge precisely how much money you will take home after paying Uncle Sam and how much income you will need to pay for your expenses during your retirement years.