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Why Is the Maximum Social Security Benefit Higher if You Retire at 70?

By Christy Bieber – Oct 17, 2021 at 5:30AM

Key Points

  • The maximum Social Security benefit is higher if you retire later.
  • Waiting to claim benefits allows you to earn delayed retirement credits.
  • Delaying until 70 to start benefits is often the best move for retirees.

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Waiting until 70 can pay off in terms of larger checks.

In 2021, the maximum Social Security benefit is $2,324 if you retire at the age of 62. If you retire at full retirement age (FRA), however, the maximum benefit goes up to $3,148. And if you retire at the age of 70, the maximum benefit is much higher at $3,895.

So, why are there different maximum Social Security benefits? The reason is simple. 

Two adults sitting at a table and reviewing financial paperwork.

Image source: Getty Images.

Here's why the maximum Social Security benefit goes up for late filers

The maximum benefit for Social Security goes up for people who delay retirement for one key reason.

The Social Security benefits program is designed for the typical retiree to get the same amount of benefits whether they claim them at the earliest eligible age of 62 or whether they wait until the age of 70 to start their checks. 

Based on actuarial projections of life expectancy, a system of early filing penalties and delayed retirement credits was created.

  • Retirees who start their benefits at their full retirement age -- which is between 66 and 2 months and 67 -- will receive their standard benefit.
  • Those who claim before FRA get a reduced benefit, with penalties applied each month that can add up to as much as a 30% reduction for those who start checks five years early.
  • Those who delay beyond FRA get an increased benefit, with delayed retirement credits applied each month that raise benefits by a total of 8% per year. 

Because of these early filing penalties and delayed retirement credits, the idea is that a senior who claims checks at 62 will get far more checks over their lifetime than someone who waits until 70. However, the amount of each of those checks will be considerably smaller. On the flip side, a retiree who waits will be rewarded with more monthly income but will of course have missed out on many months of payments. 

Now, this doesn't always ensure each individual retiree does end up with exactly the same amount of money. Some people die before their predicted life expectancy, and would've ended up better off with an early claim. Others who outlive their life expectancy end up with more total benefits if they wait to file and thus get higher checks for more than the projected number of years. 

The design of the system does mean retirees who claim late will always be entitled to a higher monthly benefit than those who claim early. And that's why the maximum monthly benefit for all retirees increases with age. The maximum benefit at 70 is based on earning the maximum delayed retirement credits, while the maximum benefit at 62 is based on getting hit with the most early filing penalties.

To earn the maximum benefit, retirees need to do more than wait until 70 -- they also need to earn the maximum taxable wages for at least 35 years. But delaying is always crucial to getting the highest possible monthly income from Social Security regardless of how much you earned. 

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