The median age at which retirees claimed Social Security benefits in 2018 was 63, according to the Employee Benefit Research Institute. This is well before the age the Social Security Administration designates as "full retirement age" (FRA). 

Your FRA is the age at which you'll receive your standard Social Security benefit. It's somewhere between 65 and 67, depending on your birth year. Those who wait until after FRA receive a boost in benefits equal to 2/3 of 1% for each month of delaying -- up until age 70, when benefits max out. Those who retire early, on the other hand, see a reduction of benefits equal to 5/9 of 1% for the first 36 months, and an additional 5/12 of 1% for every month before that. 

Social Security income is guaranteed for life once you receive it. If you can boost your monthly paycheck for the rest of your life just by waiting until your 70th birthday to start benefits, why do so many people opt to claim early? 

Older couple with calculator looking at financial paperwork

Image source: Getty Images.

Most people have no choice

The reason more people don't wait until 70 to claim Social Security benefits is simple: Most can't afford to wait

If you lose your job in your 60s, finding another one is really hard. You may also start to develop some pretty serious health problems that prevent you from working, especially if your career requires you to be physically fit. 

Since most pre-retirees have far too little savings to live on, being forced to stop working early could mean a choice between claiming Social Security or living in poverty. That's an easy decision. 

Others don't understand the penalties they'll face

Some people who have a choice about when to claim benefits still claim at 62, and not for a good reason. They do so because they don't understand the impact this has on their Social Security income. 

More than 9 in 10 Americans don't understand what factors determine their Social Security benefit amount, and almost 4 in 10 erroneously think that if they claim a reduced benefit before FRA, their monthly income will automatically increase when they hit FRA. 

You don't want to make a bad choice on claiming Social Security benefits just because you don't know how they work. The key thing to know: If you wait until 70 to claim benefits, your benefits will be larger each month than if you had claimed when you were younger. 

You'll need to do the math to figure out if claiming benefits early makes sense for you, or if you'd rather wait. The goal is to figure out how many months of higher benefits you'll need to receive to make up for years of missed income due to delaying. This chart can give you an idea of how long it would take you to break even, or you can learn exactly how to do the math yourself

If you think you'll live long enough to break even -- or to end up better off by receiving a higher monthly benefit that starts later in life -- waiting until 70 makes sense. 

Save money, and you'll have a choice on when to claim benefits

The smartest way to decide when to claim benefits is to understand how Social Security works and make a choice that maximizes the total income you'll receive.

But you'll only be able to do that if you aren't forced into getting benefits to provide income you need to live on. Since you can't control when your health will fail or when you're forced to stop working, your goal should be to save enough to support you if you have to retire before you're ready. 

By building a healthy nest egg, you'll ensure you control when to claim Social Security and aren't forced to get benefits early due to bad circumstances. Making a budget that prioritizes savings, automating contributions to tax-advantaged retirement accounts, and finding ways to cut spending so you can save more for the future are all important to give you this freedom. 

Will you claim Social Security at 70?

If you claim Social Security benefits at 70, you'll enjoy a higher income for the rest of your life. But don't count on being able to work that long. Plan now so you can be financially secure enough to wait to claim, if doing so makes sense for you. 

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