Overall, many Americans don't know enough about Social Security -- and that can have costly results. For example, Nationwide's Retirement Institute 2023 Social Security Survey found only 13% of survey respondents know what their full retirement age (FRA) is. Spoiler: It's 67 for most Americans.
Meanwhile, only 10% of non-retired Americans plan to wait until age 70 to start collecting their Social Security retirement benefits, according to the 2023 Schroders US Retirement Survey. But for most people, waiting until age 70 is actually their best option.
Here's a look at why, and how you might think through the decision of when to start collecting Social Security.
When you start is important
You can start receiving your Social Security retirement benefits as early as age 62. The earlier you claim, the smaller your checks will be. For each month you wait past 62, your checks grow larger (until they max out at age 70). Within this range, you qualify for your full benefits, or primary insurance amount, at your FRA.
And it's with this knowledge of your FRA that you can get a clear picture of how much bigger or smaller your checks may be depending on when you claim. The table below shows what percentage of your full benefits you'll receive, depending on when you start collecting:
Start Collecting at: |
Full Retirement Age of 66 |
Full Retirement Age of 67 |
---|---|---|
62 |
75% |
70% |
63 |
80% |
75% |
64 |
86.7% |
80% |
65 |
93.3% |
86.7% |
66 |
100% |
93.3% |
67 |
108% |
100% |
68 |
116% |
108% |
69 |
124% |
116% |
70 |
132% |
124% |
You could delay beyond age 70, of course, but your benefits will stop growing at age 70, so there's little reason to do so. Even with that cap, your benefit could be as much as 32% larger relative to your full benefit if you're willing to wait until age 70.
Why delaying until age 70 is a strategy worth considering
Here are some additional considerations regarding when to turn on that Social Security spigot:
- By maximizing your benefits waiting until age 70, you'll also maximize your cost-of-living adjustments (COLAs), which will put even more money into your pocket.
- If you live beyond the breakeven age of roughly 80 years, you'll come out ahead with how much you collect in lifetime benefits.
- Those who live to 62 years of age already have an average life expectancy that exceeds the breakeven age, according to data from the Social Security Administration's actuarial tables.
- If you're married and you've been the higher earner in your working life, maximizing your payout can benefit your spouse: If you die first, your spouse will get to collect the larger of your two benefits.
On top of those reasons, you can reap other benefits if you're able to postpone your retirement:
- Each additional year you work allows you to potentially save and invest more for retirement.
- Your nest egg will have to support you for fewer years.
- You may be able to stay on your employer's health insurance plan for longer.
- A shorter retirement means inflation will shrink your nest egg's purchasing power less.
Claiming early is still the best option for some people
Of course, delaying until age 70 is not ideal for everyone. If your health isn't great, claiming benefits early could be your best move. Many people don't have much of a choice, either -- millions end up retiring earlier than planned due to layoffs, health setbacks, needing to care for loved ones, or other reasons. If you're one of them, you might simply need as much income as you can get, as soon as possible.
Remember, too, that while starting early means smaller checks, you'll get many more of them, so it may not be quite as disastrous as you think to start early. Until age 80, you'll actually be coming out ahead.
By understanding the factors that should drive your decision of when to start collecting Social Security, you're already one step ahead of millions of your fellow retirees.