For more than eight decades, the Social Security program has taken retired workers under its proverbial wing and provided some degree of financial foundation. For up to 90% of current retirees, it's a source of income they simply couldn't do without.
However, the amount a retired worker can expect to receive from Social Security can vary pretty drastically. Let's take a closer look at the factors responsible for influencing Social Security retirement benefits, what the average retired worker is bringing home each month from ages 62 through 99 and over, and some of the ways payouts can be increased.
Image source: Getty Images.
How your Social Security payout is calculated
There are more than a half-dozen factors that can influence what you'll receive from Social Security and how much of your payout you'll get to keep. For instance, 12 states and the federal government are currently taxing Social Security benefits to some degree.
But when retired worker benefits are whittled down to the core, four factors stand head and shoulders above everything else: Work history, earnings history, full retirement age, and claiming age.
The first two are effectively joined at the hip. When the Social Security Administration (SSA) calculates your monthly retired worker benefit at full retirement age (FRA), it does so by taking your 35 highest-earning, inflation-adjusted years into account. While it's important to earn as much as possible each year, it's equally important to work at least 35 years. For every year less than 35 worked, the SSA averages a $0 into your monthly calculation.
Your FRA is the age you become eligible to receive 100% of your retired worker benefit. It's determined by your birth year, which you have no control over. Anyone born in 1960 or later will have to wait until age 67 to claim their full benefit.
The fourth factor, and the one I'd label as most important to swinging the payout pendulum, is your claiming age. Retired worker benefits can be claimed as early as age 62. However, the Social Security program incentivizes patience. Every year you delay taking your payout, your monthly benefit can grow by up to 8%. This payout boost continues from age 62 until age 70.
Here's the average Social Security retirement benefit by age
With a solid understanding of how Social Security benefits are calculated, let's take a closer look at how worker choices have influenced payouts over multiple decades.
| Age | Average Retirement Benefit | Age | Average Retirement Benefit |
|---|---|---|---|
| 62 | $1,274.87 | 81 | $1,868.38 |
| 63 | $1,365.47 | 82 | $1,847.53 |
| 64 | $1,411.50 | 83 | $1,811.46 |
| 65 | $1,504.98 | 84 | $1,792.50 |
| 66 | $1,719.85 | 85 | $1,763.55 |
| 67 | $1,844.83 | 86 | $1,711.09 |
| 68 | $1,848.10 | 87 | $1,687.60 |
| 69 | $1,818.70 | 88 | $1,685.02 |
| 70 | $1,963.48 | 89 | $1,690.89 |
| 71 | $1,946.34 | 90 | $1,714.15 |
| 72 | $1,915.61 | 91 | $1,701.46 |
| 73 | $1,925.76 | 92 | $1,698.24 |
| 74 | $1,937.47 | 93 | $1,698.28 |
| 75 | $1,908.14 | 94 | $1,706.67 |
| 76 | $1,921.61 | 95 | $1,711.82 |
| 77 | $1,875.95 | 96 | $1,691.54 |
| 78 | $1,868.79 | 97 | $1,703.11 |
| 79 | $1,866.14 | 98 | $1,676.59 |
| 80 | $1,868.63 | 99 and over | $1,652.46 |
Data source: Social Security Administration, as of December 2022. Table by author.
The nearly 48.6 million retired beneficiaries who comprise the data you see above averaged a monthly Social Security check of $1,825.14 in December 2022. But there are two notable trends within this average payout dataset that really stand out.
The first is easily recognizable: The mammoth gap in average payout between ages 62 and 70. For example, a retiree born in 1960 could have begun taking their retired worker benefit last year. In doing so, they would have accepted an up to 30% permanent reduction in their monthly payout.
By comparison, this same person also has the choice of waiting to claim their payout until age 70. Although they're eligible to receive 100% of what they're due at age 67 (the FRA for someone born in 1960), waiting until age 70 can pump up their payout to 124% of what they'd have received at FRA. The gap in average retirement benefits between ages 62 and 70 is predominantly a reflection of retirees claiming early versus waiting.
The second trend worth noting is more subtle. You'll note that from roughly age 86 and above, the average amount paid to retired workers remains relatively stable. This is because women, on average, live longer than men. Since women have historically been more likely than men to be stay-at-home parents, and have historically been paid less than men on average, their earned income (and therefore monthly Social Security benefit) tends to be lower than mens'.
Image source: Getty Images.
Claiming age is key, but there's a do-over clause to keep in mind
Something else you probably noticed from this claims data is that average retired-worker payouts won't make you rich. Based on the average monthly benefit in December 2022, the typical retired beneficiary brought home less than $22,000 a year from Social Security.
The easiest way to influence what you'll receive is to really think about the claiming age that works for you. While there are some instances where an early claim is logical, such as if you have a chronic health condition or no other sources of income, a later claim has, historically, been the better move.
In 2019, financial services and retirement planning company United Income analyzed more than 20,000 previous retired worker benefit claims from the University of Michigan's Health and Retirement Study to determine if these retirees made optimal decisions. Whereas the vast majority of retirees began taking their payouts well before hitting FRA, United Income found that 57% of claimants would have optimized their lifetime benefits received by waiting until age 70.
That leads me to the next point: Lifetime benefits matter far more than how much you receive each month. If you're in good health and don't have much saved for retirement, there's a pretty good chance you'll rely on Social Security income to cover a substantial portion of your expenses as you age. Although claiming a benefit early can net you up to eight years of Social Security checks prior to taking your payout at age 70, waiting until 70 can lead to substantially more lifetime income if you live to 85 or older.
Lastly, remember that you have Social Security's little-known do-over clause in your corner. If you regret making an early claiming decision -- say you filed for benefits early because you couldn't find work, but landed a well-paying job a few months later -- and want to undo your benefits claim, Form SSA-521 ("Request for Withdrawal of Application") can come to your rescue.
As long as it's approved by the SSA and you file within the first 12 months of receiving benefits, SSA-521 can undo your original claim and allow your benefits to grow once again. However, you'll have to repay any benefits you've received.
