The most common age for claiming Social Security is 62, but waiting until age 70 to begin receiving benefits will net you significantly more money. For example, if you have a full retirement age of 67 and you don't start collecting your benefits until age 70, your payment will be 77% bigger than the amount you'd otherwise collect at age 62. Here is a breakdown of how much you can receive at age 70 depending on your birth year, and some tips for deciding whether or not to wait to file for Social Security.
Social Security's delayed retirement credits
You'll only receive 100% of the Social Security benefits you've earned if you file for them at your full retirement age, which varies depending on your birth year. For people born between 1943 and 1954, full retirement age is 66, but for people born after 1954, it increases by two months per year until it reaches 67 for people born in or after 1960.
Image source: Getty Images.
You can begin receiving benefits as early as age 62, but Social Security is designed to pay you the same amount in lifetime benefits regardless of how old you are when you begin receiving them, so you'll get less money each month if you file for benefits before full retirement age and more money if you file for benefits after full retirement age.
Specifically, Social Security will reward you with delayed retirement credits that increase monthly Social Security income by a fixed percentage for every month you hold off. When they were introduced in 1972, delayed retirement credits increased benefits by 1/12 of 1% for each month you waited (1% annually) up until age 72. In 1983, the rules changed so that today, they increase your benefit by up to 2/3 of 1% per month (8% annually) up to age 70.
The exact amount of the increase depends on the year you were born:
| Benefit Increase for Delayed Retirement by Birth Year | ||
|---|---|---|
| Birth Year | Monthly Credit | Annual Credit |
| 1916 or earlier | 1/12 of 1% | 1% |
| 1917-1924 | 1/4 of 1% | 3% |
| 1925-1926 | 7/24 of 1% | 3.50% |
| 1927-1928 | 1/3 of 1% | 4% |
| 1929-1930 | 3/8 of 1% | 4.50% |
| 1931-1932 | 5/12 of 1% | 5% |
| 1933-1934 | 11/24 of 1% | 5.50% |
| 1935-1936 | 1/2 of 1% | 6% |
| 1937-1938 | 13/24 of 1% | 6.50% |
| 1939-1940 | 7/12 of 1% | 7% |
| 1941-1942 | 5/8 of 1% | 7.50% |
| 1943 or later | 2/3 of 1% | 8% |
Source: Social Security Administration.
How much can I get at age 70?
Since the credits increase the amount you'd otherwise receive at full retirement age (FRA), it's helpful to understand how Social Security calculates your FRA benefit.
To determine your FRA benefit, Social Security adjusts your 35 highest-earning years for inflation to determine your average monthly earnings during your career. Then it lowers that amount by a fixed percentage at specific income thresholds called bend points to determine your FRA benefit. The percentage of your historical average monthly income you get credit for is fixed by law, but the income thresholds used for each bend point are determined annually by Social Security based on wage inflation.
|
Fixed Percentages of Income Used in Bend Points Calculation | ||
|---|---|---|
|
Up to First Bend Point |
Between First and Second Bend Points |
Above Second Bend Point |
|
90% |
32% |
15% |
Source: Social Security Administration.
The formula is complex, but don't worry, Social Security does the math for you. You can find out your FRA benefit by logging into Social Security's website.
Once you know your FRA payment, you can figure your age 70 benefit by multiplying that amount by the percentage increase associated with your delayed retirement credits as displayed in the table below.
| Birth Year | Full Retirement Age | % Paid Based on Age When You Claim | ||
|---|---|---|---|---|
| 66 | 67 | 70 | ||
| 1943-54 | 66 | 100 | 108 | 132 |
| 1955 | 66, 2 months | 98 8/9 | 106 2/3 | 130 2/3 |
| 1956 | 66, 4 months | 97 7/9 | 105 1/3 | 129 1/3 |
| 1957 | 66, 6 months | 96 2/3 | 104 | 128 |
| 1958 | 66, 8 months | 95 5/9 | 102 2/3 | 126 2/3 |
| 1959 | 66, 10 months | 94 4/9 | 101 1/3 | 125 1/3 |
| 1960 and later | 67 | 93 1/3 | 100 | 124 |
Data source: Social Security Administration.
One thing you'll notice in the table is that people who were born more recently will receive less of an increase than people who were born longer ago. For example, if you were born in or after 1960, you have an FRA of 67, so waiting until age 70 would give you a 24% increase (three years times 8% per year). Alternatively, if you were born before 1954, your FRA is 66, so waiting nets you a 32% increase (four years times 8% per year).
Image source: Getty Images.
Why waiting can make sense
Holding off until age 70 gives you a nice bump up in benefits, especially when you compare your age 70 benefit with your age 62 benefit.
If you claim earlier than full retirement age, Social Security reduces your FRA benefit by 5/9 of 1% for the first 36 months claimed early and by 5/12 of 1% per month for each additional month claimed early. As a result, people with a full retirement age of 66 collect only 75% of their FRA benefit at 62, and those with a full retirement age of 67 collect only 70% of their FRA benefit.
Assuming an FRA benefit of $1,000, those with a full retirement age of 67 would only pocket $700 per month by claiming at 62, or about 56% of the $1,240 per month they'd receive at age 70.
There are other benefits associated with waiting, too. For example, if you start your benefits sooner than full retirement age, your Social Security income will be withheld if you earn more than a set limit every year. However, there's no earnings test after you've reached full retirement age, so you can work as much as you like and pocket your entire Social Security benefit at age 70.
Additionally, if your spouse will receive survivor benefits after you're gone, the amount will be based on your benefit and your spouse's age. A spouse who has reached full retirement age will collect 100% of whatever amount you were collecting while you were alive, so delaying can be a good way to ensure your spouse's financial security as well.
