In June, the average retired worker received a Social Security check totaling $1,837.29, which extrapolates out to a little over $22,000 per year. While this isn't a particularly large payout, the overwhelming majority of the program's more than 49 million retired workers relies on this steady stream of monthly income to cover their expenses.
Starting in 2002, national pollster Gallup began questioning retirees to gauge their reliance on Social Security income. All 22 years of surveys have shown that between 80% and 90% of retired respondents lean on their Social Security benefits as either a "major" or "minor" income source. In other words, it's necessary income to sustain their way of life.
With America's top retirement program playing such an important role in the financial future of a vast majority of workers, maximizing what you'll receive from Social Security on a monthly basis, or during your lifetime, is of the utmost importance. To that end, one Social Security table can quickly tell beneficiaries how well they might fare.
Image source: Getty Images.
The four components to your monthly Social Security payout
Before digging into this all-important Social Security table, it first makes sense to cover the components that determine what you'll be paid on a monthly basis by the Social Security Administration (SSA). Keep in mind that there is a difference between what you're paid and what you get to keep. Between the taxation of Social Security benefits for certain recipients and the retirement earnings test for early filers, your final take-home could be markedly below what you expect to receive or keep.
The building blocks that form the foundation of your monthly Social Security check are your work history, earnings history, full retirement age, and claiming age. One of these elements is certainly not like the rest.
To start with, the SSA takes your 35 highest-earning, inflation-adjusted years into account when calculating your monthly payout at full retirement age. This means it's important to earn as much as you can (up to the maximum taxable earnings cap) in the years you are employed, as well as work for a minimum of 35 years to avoid a $0 being averaged into the calculation for every year less of 35 worked.
The third component that helps determine your monthly Social Security benefit is your full retirement age. Your full retirement age is set by your birth year and represents the age you become eligible to receive 100% of your retired-worker benefit.
The fourth factor used to calculate your monthly Social Security check is your claiming age. I'd argue this factor, more than any others, can really swing the payout pendulum higher or lower, depending on when you begin receiving your payout.
Your financial livelihood during retirement may depend on this Social Security table
For those who've earned the requisite 40 lifetime work credits to receive a retired-worker benefit, the challenge can be deciding when to begin receiving your Social Security check. Although benefits can begin at age 62, the program encourages patience. For every year an eligible beneficiary holds off on taking their payout, their benefit can grow by up to 8%, through age 69, as shown in this Social Security table.
| 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.
The analogy I find most helpful is to think of your full retirement age as a line in the sand. If you decide to begin receiving your Social Security benefit prior to reaching this line, your monthly payout will be permanently reduced. For those born in 1960 or later who take their benefit as early as possible (age 62), this reduction could be as much as 30% per month!
By comparison, waiting until after you cross this proverbial line in the sand to begin receiving your Social Security check comes with a reward. If taking benefits at age 70, your monthly payout could be anywhere from 24% to 32% above what you would have received at full retirement age, depending on your birth year.
The nominal-dollar gap in monthly benefits between an age 62 claim and an age 70 claim is also probably bigger than most people realize.
Let's hypothetically assume that the aforementioned average monthly retired-worker payout of $1,837.29 for June is what the baseline payout would be at age 67 (i.e., full retirement age) for a person born in 1960 or later. Taking benefits at age 62 would therefore reduce this monthly check by 30%, or $551.19 per month!
Conversely, an age 70 claim would result in a 24% boost, relative to full retirement age, or $440.95 extra each month. That's a $992.14 difference in payout each month, or nearly $12,000 for the full year.
Image source: Getty Images.
Statistically, some claiming ages work out better than others
In spite of this cavernous gap in monthly benefits, most retired workers have taken their payout prior to reaching full retirement age. According to Social Security's 2022 Annual Statistical Supplement, 65% of the more than 47 million retired workers (as of the end of 2021) were accepting a permanent reduction to their monthly payout.
But at least one study has shown that early filers have the odds stacked against them.
In 2019, online financial planning company United Income released a report that extrapolated the Social Security claims of approximately 20,000 workers using data from the University of Michigan's Health and Retirement Study. By "extrapolated," I mean researchers back-tested each claim to determine if the worker made an "optimal" choice that maximized their lifetime (key word!) benefits from the program, or made a choice that was suboptimal, in hindsight.
The results showed that only a combined 6.5% of claimants at ages 62 and 63 made an optimal decision. On the other hand, 57% of the roughly 20,000 claims analyzed would have made the best possible choice had they waited to take benefits until age 70. Ages 67 and 69, in that order, were the second- and third-best claiming ages, with regard to receiving the maximum lifetime benefit.
For some retirees, an early claim will still make sense. For instance, if you have a chronic or debilitating health condition, claiming benefits early and collecting even a reduced payout can maximize what you'll receive from the program. But based on this statistical analysis from United Income, patience could be the key to securing your financial future.
