In May, the average Social Security check for retired workers totaled $1,836.06, which works out to a little over $22,000 per year. While that may not sound like a lot, Social Security income is playing a big role in pulling seniors out of poverty and building a financial foundation for retired workers during their golden years.
According to recently updated data from the Center on Budget and Policy Priorities (CBPP), America's top retirement program lifts 21.7 million people out of poverty every year, nearly 15.4 million of which are aged 65 and over. The CBPP estimates that the poverty rate for retirees aged 65 and older would be 38%, or almost four times higher than the current 10% poverty rate for seniors, if the Social Security program didn't exist.
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Whether you're nearing retirement or just entering the workforce, there's a good chance you're going to rely on your Social Security income to some varied degree to cover your expenses. It, therefore, pays to get as much out of the program as possible -- and that all starts with familiarizing yourself with the Social Security retirement age chart.
Your journey to an optimal claiming decision begins with the retirement age chart
Truth be told, there are well over a half-dozen factors that can affect how much you'll receive each month from Social Security or how much of that payment you'll ultimately get to keep. For instance, benefits can be withheld for certain early filers, and the federal government (along with 12 states) can tax a portion of Social Security benefits above select income thresholds.
But when boiled down to the basics, there are four factors that ultimately determine your monthly Social Security check. Those being your:
- Work history
- Earnings history
- Full retirement age
- Claiming age
The first two factors are intertwined. When the Social Security Administration calculates your benefit, it does so by taking your 35 highest-earning, inflation-adjusted years into account. For every year less of 35 worked, a $0 is averaged into the calculation, which can weigh down what you'll receive each month.
That brings us to the all important third factor: the Social Security retirement age chart.
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Your full retirement age is determined by your birth year and represents the age where you become eligible to receive 100% of your monthly benefit. As you can see, the full retirement age for most current and future beneficiaries is 66, 67, or perhaps somewhere in-between.
The best way to think about the retirement age chart is as a line in the sand. This line in the sand, which is specific to your birth year, provides a baseline that determines if you'll receive 100% of your benefit. If you were to begin taking your payout prior to reaching this line in the sand, you can expect a permanent reduction to what you'll receive each month. Comparatively, if you wait to receive a Social Security check until after your full retirement age, your payout will be permanently increased on a monthly basis.
Knowing your full retirement age is the first important step in making an educated Social Security claiming decision.
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It's tough to make an optimal claiming decision without knowing your full retirement age
The fourth factor paramount to getting the most out of Social Security is your claiming age. Retired worker benefits can begin as early as age 62, but as you'll see in a moment, patience is highly incented.
Using the same analogy as above -- your full retirement age represented as a line in the sand -- your claiming age can vastly alter what you'll receive each month. Claiming benefits at age 62 for someone born in 1960 or later (i.e., well before the proverbial line in the sand) can lead to a permanent monthly payout reduction of up to 30%. On the other hand, retirees born in 1954 who choose to wait until age 70 to begin taking their Social Security check can receive a boost of up to 32% above and beyond what they'd have received at age 66 (the full retirement age for people born in 1954).
As seen in the table below, Social Security benefits can grow by up to 8% annually for every year you hold off on taking your payout. This accrual begins at age 62 and continues until age 70.
| Birth Year | Age 62 | Age 63 | Age 64 | Age 65 | Age 66 | Age 67 | Age 68 | Age 69 | Age 70 |
| 1943-1954 | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% | 132% |
| 1955 | 74.2% | 79.2% | 85.6% | 92.2% | 98.9% | 106.7% | 114.7% | 122.7% | 130.7% |
| 1956 | 73.3% | 78.3% | 84.4% | 91.1% | 97.8% | 105.3% | 113.3% | 121.3% | 129.3% |
| 1957 | 72.5% | 77.5% | 83.3% | 90% | 96.7% | 104% | 112% | 120% | 128% |
| 1958 | 71.7% | 76.7% | 82.2% | 88.9% | 95.6% | 102.7% | 110.7% | 118.7% | 126.7% |
| 1959 | 70.8% | 75.8% | 81.1% | 87.8% | 94.4% | 101.3% | 109.3% | 117.3% | 125.3% |
| 1960 or later | 70% | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% |
Data source: Social Security Administration.
For those wondering what claiming age is best, studies have shown that being patient tends to produce superior results.
In 2019, online investment management and financial planning company United Income used data from the University of Michigan Health and Retirement Study to determine if approximately 20,000 claimants had made an "optimal" claiming decision. By "optimal," United Income was looking for a claiming decision that resulted in the retiree getting the highest lifetime benefits from Social Security. Note, highest lifetime benefit may not mean receiving the highest monthly benefit.
United Income's study found that only 6.5% of claimants who began receiving a Social Security benefit at ages 62 or 63 made an optimal decision. However, a vast majority of the extrapolated cases United Income examined involved a claim prior to reaching full retirement age.
By comparison, 57% of retirees would have made an optional claiming decision if they'd begun taking their payout at age 70. Ages 69 and 67 were, respectively, also optimal for approximately 10% of the claimants examined.
Statistically speaking, being patient pays off more often than not with Social Security -- and that all starts with having a good understand of the retirement age chart and knowing how long you'll need to wait to collect your full benefit, if not a bit more.
