Presidential candidate Joe Biden is, like most older Americans, a recipient of Social Security benefits. In 2019, the Bidens collectively received a total of $52,595 from Social Security. The reality, however, is that they could have received more. But also like most Americans, Joe Biden passed up the chance to maximize his monthly income from this important retirement program.

Here's how Joe Biden missed his chance on Social Security

The former vice president has made past tax returns available for many years, so it's easy to determine when he claimed Social Security for the first time. While he had no Social Security income in 2007, he received a small amount in 2008, during the year he turned 66.

Mr. Biden was born in 1942, which means that his full retirement age (FRA) -- or the age at which he was eligible to receive his standard benefit -- was 65 and 10 months. That means Mr. Biden likely started his benefits just a short time after reaching his full retirement age. 

By waiting until his FRA, he was able to avoid a penalty for early filing. However, by not waiting longer, he passed up the chance to get the largest possible monthly checks. To do that, he'd have had to delay claiming Social Security another few years until he reached his 70th birthday in 2012. 

Social Security card sitting on top of money.

Image Source: Getty Images.

Waiting until 70 is the financially optimal choice for the majority of retirees because it means larger checks for the rest of your life once you start receiving them. That's because for each month you delay past full retirement age, your benefits increase by two-thirds of 1%.

This small monthly increase adds up to an 8% annual bump in the size of your checks. Had Mr. Biden waited until age 70, he would've been entitled to around a 32% increase in his monthly income compared with the amount he's getting. 

Of course, those who choose to wait until 70 take the risk of not living long enough to break even. Social Security is designed so it theoretically doesn't matter when you first claim benefits -- you're supposed to get the same amount of money over your lifetime no matter when you file. But this works only if you live to your projected life expectancy.

If you pass away before the projected time, you'll die before the larger checks you'd get (thanks to waiting) will make up for the income you missed out on by delaying. If you pass away after your projected life expectancy, though, you'd continue getting larger checks for the rest of your life, even after making up for the forgone income. It usually takes many years to break even, but Mr. Biden -- who's now 77 -- would have been receiving larger checks for seven years already had he waited until 70, and he'd be well on his way to doing so.

Further, waiting until 70 can help protect a lower-earning spouse as the surviving spouse receives the higher of the two benefits after a death. As Dr. Jill Biden -- who was born in 1951 -- earned plenty of income in her own right, this may not matter much in this case. But if Joe's benefits were higher than hers, his early claim also means the couple could get less combined lifetime income if he passes away first. Of course, since Dr. Biden is likely getting her own benefits, this also means Joe's early claiming decision likely wasn't driven by a spousal coordination strategy.   

The bottom line is, for the Bidens, devising a strategy to get the largest possible Social Security benefits likely isn't that important, as the couple has received millions in income in recent years and is almost assuredly financially stable. But for retirees who can't earn book royalties, large speaking fees, or even a possible presidential salary, choosing to claim Social Security at the right time could make all the difference in how secure their later years are.