Social Security is a lifeline for millions of retirees in the U.S., but it's more than just a simple monthly check to cover living expenses.
It's a decision you have to make, and like other financial decisions, it comes with trade-offs.
Your monthly Social Security benefit is primarily made up of two factors. The first is your average indexed monthly earnings (AIME) over your working career, specifically your 35 highest-earning years. If you're near retirement, you unfortunately have little control over that figure.
The second, which you do have control over, is when you choose to start receiving your Social Security benefit, which you can do at any age between 62 and 70. The longer you delay getting your benefit, the more you will earn.
The chart below, which applies to people born from 1943-1954, shows how much of your full benefit you'll receive based on when you start claiming Social Security.
| Retirement age | % of Social Security benefits you get |
|---|---|
| 62 | 75% |
| 63 | 80% |
| 64 | 86.7% |
| 65 | 93.3% |
| 66 | 100% |
| 67 | 108% |
| 68 | 116% |
| 69 | 124% |
| 70 | 132% |
Source: Social Security Administration taken from these two charts
As you can see, there's a significant difference between the lowest benefit and the highest benefit. You'll get 76% more money in your monthly benefit if you take Social Security at 70 versus 62. Of course, you'll be starting eight years later.
Image source: Getty Images.
Decisions, decisions
There are lots of different reasons to take Social Security at 62, 70, or some age in between, and you'll want to consider things like your healthcare needs, when you plan to retire, family circumstances, and other sources of income like investments.
Given the discrepancy in benefits between starting at 62 and starting at 70, it may not come as a surprise that some Americans regret taking Social Security too early.
According to a recent paper from the National Bureau of Economic Research, 19% of survey participants said they regretted taking Social Security too soon.
Among the other top regrets the retirees had were not having saved enough, not purchasing long-term care insurance, and not working longer.
The study found that women were 21% less regretful than men were for claiming Social Security too early, while Blacks were 37% more regretful than whites about taking benefits too soon.
Feelings about taking the retirement benefits early also changed when participants were given information about their life expectancies. In particular, regret over claiming Social Security early rose by 37% among people in good health.
Notably, the report doesn't specify what percentage of the overall respondents took Social Security early, so 19% would be the minimum. Based on just those who took it early, it's possible that the percentage of those who regret it is higher.
After age 66, which is the full retirement age for those born in 1954 or earlier, age 62 is the most popular age to start receiving Social Security benefits. Of those who started collecting Social Security in 2022, 22.9% of men and 24.5% of women were 62, though the percentage of people choosing to start getting benefits at 62 has declined over the last decade.
The NBER report doesn't draw any conclusions about why some people regret taking Social Security early, but the note about respondents in good health offers a clue. If you live long enough, delaying your benefit will almost certainly pay off. Of course, nobody knows how long they will live, and they generally have less information about their life expectancy when they make the decision to start collecting Social Security.
What's the right age to take Social Security for you?
A wide range of factors will influence when you choose to start taking Social Security, and depending on your personal needs, it could make sense to claim your benefits early.
For example, you might have a pressing financial need or have a reason to believe that you may not live to the average life expectancy. Taking Social Security early is not necessarily a bad decision. In fact, if you live to the average life expectancy, you should collect roughly the same amount in retirement, no matter when you start.
However, if you're in good health and either still in the workforce or financially able to support yourself through your 60s without help, it probably makes sense to delay collecting Social Security benefits for as long as you can.
