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Here's How to Collect Your Full Social Security Retirement Benefit

By Sean Williams – Updated Nov 20, 2020 at 2:05PM

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Patience is the key to receiving 100% of your monthly payout from Social Security.

In case you weren't aware, Social Security is a pretty big deal for most retired workers, and will probably be a key income source for future retirees.

According to a Gallup survey released in April, 89% of current retirees rely on their Social Security income to some degree to make ends meet, which is 1 percentage point below this survey's all-time high. Meanwhile, 88% of nonretirees expect their Social Security payout to be a major or minor source of income during their golden years, representing an all-time high since the poll began in 2001. 

A person filling out a Social Security benefits application form.

Image source: Getty Images.

With Social Security income playing such a critical role in the financial well-being of our nation's elderly, it's fair to say that a worker's claiming age (i.e., the age when they decide to take their retirement benefit) might well be the most important decision they'll ever make. Choose the wrong age to begin taking your payout, and you could leave a boatload of money on the table over your lifetime.

Perhaps the best way to ensure your financial future is by making sure to collect your full Social Security retirement benefit.

Here's when you're eligible for 100% of your Social Security retirement benefit

Though there are more than a half-dozen factors that can affect what you'll receive or get to keep from Social Security, a few determinants loom larger than the rest.

For example, the Social Security Administration takes into account a worker's 35 highest-earning, inflation-adjusted years when calculating their monthly retirement benefit. By this definition, earning as much as possible (up to the maximum taxable earnings cap in a given year) and working at least 35 years are two puzzle pieces to maximizing your payout.

But in order to collect your full Social Security retirement benefit without any reductions, you have to be patient. You must also understand how your birth year and claiming age can affect your monthly payout.

An half-emptied hourglass next to a calendar on a table.

Image source: Getty Images.

Your full retirement age (also referred to as "normal retirement age" by the Social Security Administration) describes the age at which you become eligible to receive 100% of your monthly benefit as determined by your birth year. The full retirement age schedule is as follows:

  • Born between 1943 and 1954: Age 66
  • Born in 1955: 66 years and 2 months
  • Born in 1956: 66 years and 4 months
  • Born in 1957: 66 years and 6 months
  • Born in 1958: 66 years and 8 months
  • Born in 1959: 66 years and 10 months
  • Born in 1960 or later: Age 67

For baby boomers, collecting your full benefit means waiting to take your payout until you're between 66 and 67. For Gen Xers, millennials, and Generation Z, your full retirement benefit becomes available when you turn 67.

Thus, claiming benefits at any point before age 66 for baby boomers, or earlier than age 67 for Gen Xers, millennials, and Generation Z, is going to result in a permanent monthly reduction of your retirement benefit of up to 30%, depending on your birth year. The Social Security Administration also incentivizes delay by offering credits. For every year up to age 70 that a person holds off on taking their payout, their monthly benefit grows, potentially reaching up to 8% per year.

A senior man counting a fanned stack of cash in his hands.

Image source: Getty Images.

Waiting makes sense for most people

Admittedly, deciding when to begin taking Social Security retirement benefits is a bit of a crapshoot. Since we (thankfully) don't know our expiration date, we'll never know ahead of time whether we've made an optimal claiming decision. By "optimal," I mean a decision that nets the highest amount of lifetime benefits.

However, a study released in June 2019 provided a pretty convincing amount of evidence that waiting until at least full retirement age proved fruitful for a majority of retired workers.

United Income's analysis -- "The Retirement Solution Hiding in Plain Sight" -- looked at claiming age data from the University of Michigan Health and Retirement Study of approximately 2,000 households. It then compared this claiming age data versus what would have been the optimal claiming age for these individuals.

The comparison showed that waiting until age 70 to begin taking Social Security retirement benefits would have represented an optimal claiming decision for 57% of the retirees studied. Further, more than 4 out of 5 retired workers would have been best off claiming at or after age 67, which is set to become Social Security's full retirement age in 2022. Comparatively, less than 7% of retired workers made an optimal choice by taking their payout at ages 62, 63, or 64.

There is no perfect benefit-claiming formula, nor any guarantee that you'll make the best possible choice. But surveys on Social Security reliance and United Income's optimal claiming study strongly encourage patience when making your Social Security claiming decision.

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