Love it or hate it, Social Security is a cornerstone of American retirement income. According to the Social Security Administration, almost 90% of Americans over 65 receive Social Security, and it represents a substantial portion of retirement income for the majority of elderly Americans. 

It's also a very flexible way to get retirement income, since people can start getting a Social Security check as early as 62, or delaying as late as 70. The age you choose to start getting Social Security plays a big role in the size of your monthly benefit, and far too many Americans choose to start Social Security at the earliest age of 62. According to the most recent data, 32% of men and 37% of women filed as soon as they were eligible. The good news is the percentage has fallen in recent years, but the bad news is many of those who file early are making a mistake. 

Senior man and woman share an umbrella in the rain.

Image source: Getty Images.

Retirees are living longer (and filing early means a lot less money)

It may seem like the smart decision to file for Social Security early and get as many checks as you can before you die and not leave any "money on the table." However, most people would actually end up getting more money by putting off Social Security until their Full Retirement Age (between 66 and 67 for most current workers) or even after, versus claiming as soon as possible. The following table breaks down when the age you file and the age you die would result in the biggest total payout: 

Claiming Age: 62 63 64 65 66 67 68 69 70
Monthly benefit:  $750  $800  $866  $933  $1,000  $1,080  $1,160  $1,240  $1,320
Total Benefit by Age
70  $81,000  $76,800  $72,744  $67,176  $60,000  $51,840  $41,760  $29,760  $15,840
71  $90,000  $86,400  $83,136  $78,372  $72,000  $64,800  $55,680  $44,640  $31,680
72  $99,000  $96,000  $93,528  $89,568  $84,000  $77,760  $69,600  $59,520  $47,520
73  $108,000  $105,600  $103,920  $100,764  $96,000  $90,720  $83,520  $74,400  $63,360
74  $117,000  $115,200  $114,312  $111,960  $108,000  $103,680  $97,440  $89,280  $79,200
75  $126,000  $124,800  $124,704  $123,156  $120,000  $116,640  $111,360  $104,160  $95,040
76  $135,000  $134,400  $135,096  $134,352  $132,000  $129,600  $125,280  $119,040  $110,880
77  $144,000  $144,000  $145,488  $145,548  $144,000  $142,560  $139,200  $133,920  $126,720
78  $153,000  $153,600  $155,880  $156,744  $156,000  $155,520  $153,120  $148,800  $142,560
79  $162,000  $163,200  $166,272  $167,940  $168,000  $168,480  $167,040  $163,680  $158,400
80  $171,000  $172,800  $176,664  $179,136  $180,000  $181,440  $180,960  $178,560  $174,240
81  $180,000  $182,400  $187,056  $190,332  $192,000  $194,400  $194,880  $193,440  $190,080
82  $189,000  $192,000  $197,448  $201,528  $204,000  $207,360  $208,800  $208,320  $205,920
83  $198,000  $201,600  $207,840  $212,724  $216,000  $220,320  $222,720  $223,200  $221,760
84  $207,000  $211,200  $218,232  $223,920  $228,000  $233,280  $236,640  $238,080  $237,600
85  $216,000  $220,800  $228,624  $235,116  $240,000  $246,240  $250,560  $252,960  $253,440

The green boxes indicate  the future age when a particular claiming age generates the most dollars received. The red cells show which claiming age would result in the least dollars paid out. 

The big takeaway: The only time filing at 62 results in the biggest payday is if you die before turning 76. The thing is, the average 62 year-old man will live another 20 years, while a woman of the same age will live another 24 years. 

Simply put, taking Social Security later would put tens of thousands of dollars more in the average senior's pocket versus filing at 62. 

Most retirees count on Social Security for at least half their income

Senior man and woman with sad expressions wearing work clothes.

Image source: Getty Images.

Social Security represents about 33% of income for the average senior, but many retirees count on it for far more. About half of married couples and 71% of unmarried persons on Social Security get at least 50% of their income from it. A large minority counts even more on it, with 23% of those married and 43% of unmarried filers getting 90% of their income from Social Security. 

By deferring Social Security, those who count heavily on Social Security would also get a bigger benefit each month. Bigger checks can make a huge difference later in life, when earning an income becomes even more difficult. 

It's not a mistake for everyone to claim at 62, but...

There are good reasons to claim early, such as needing the income to make ends meet and having no alternatives, or not being likely to live past your mid-70s. This is precisely why the system is structured for early filing: Some people need it earlier, while others have the ability to delay. But too many of those who file early have other alternatives, and by claiming early they pay a price late in life when the extra income would come in handy. 

So before you file at age 62 simply because you can, take the time to understand the potential consequences, and consider whether filing early is really in your best interest, both in the short and long term. 

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