Every month, the Social Security Administration (SSA) sends out more than 50 million checks to retired workers. For many of these retirees, their monthly payout is a necessity to cover at least a portion of their expenses.
The same will likely hold true for future generations of retirees. More than two decades of annual surveys from national pollster Gallup have shown that between 76% and 88% of then-current workers anticipate leaning on their Social Security income to some degree during retirement to make ends meet.
For the tens of millions of Americans currently in the labor force who'll qualify for a Social Security retirement benefit, getting the most out of the program is essential. But in order to do so, you'll need to understand how your retired-worker benefit is calculated, and how your claiming age can meaningfully affect what you'll receive on a monthly and/or lifetime basis.
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Your Social Security check is calculated using these four items
While there are several interesting quirks to America's top retirement program, including the possibility of being taxed at the federal level and in select states, there are only four factors that matter when calculating your retired-worker benefit:
- Work history
- Earnings history
- Full retirement age
- Claiming age
The initial two of these four items (work history and earnings history) are inseparable. To calculate your monthly Social Security check, the SSA will use your 35 highest-earning, inflation-adjusted years. If you earn more, on average, throughout your lifetime, or you work longer and allow your higher-earning years to replace lower-earning years from your younger days, there's a decent chance you'll end up receiving a larger retired-worker benefit. Note that the SSA will average in a $0 for every year less than 35 worked.
The third item used to calculate your Social Security benefit is your full retirement age (FRA). This is the age a beneficiary becomes eligible to receive 100% of their monthly payout, and it's determined by the year they're born. Anyone born in or after 1960, which constitutes most of today's labor force, has a FRA of 67.
The fourth factor used to calculate your Social Security check, and the one that can have the greatest bearing on your financial well-being during retirement, is your claiming age. Even though retired-worker benefits can begin as soon as an eligible recipient turns 62, the program rewards those willing to wait. For every year a beneficiary waits to claim their payout, beginning at age 62 and continuing through age 69, their benefit can grow by as much as 8%, as shown in the table below.
| 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.
What's the average Social Security benefit at ages 62 and 70?
Based on your claiming age, your monthly benefit could be permanently reduced by as much as 30%, or perhaps come in 32% above what you'd have received at FRA, depending on your birth year.
Although the variance in these monthly payouts is sizable, ages 62 and 70 are likely to be popular claiming choices in the future for a variety of reasons.
The clearest advantage of an age 62 claim is not having to wait to get your hands on your retired-worker benefit.
What's more, the annually released Social Security Board of Trustees Report has cautioned since 1985 that the program was staring down a long-term (75-year) funding obligation shortfall. The 2023 report estimates a $22.4 trillion long-term cash shortfall that could result in sweeping retired-worker benefit cuts of as much as 23% by 2033. An earlier claim would, in theory, allow beneficiaries to front-run potential trouble in America's top retirement program.
To be clear, Social Security isn't in any danger of going bankrupt or becoming insolvent. However, the sustainability of the current payout schedule, including cost-of-living adjustments, is at risk.
Meanwhile, claiming benefits at age 70 would allow workers to maximize their monthly payout. Future generations of retirees would receive a 24% payout bump over what they were due at FRA.
Increased longevity is another reason future retirees may make an age 70 claim. Despite a small decline in U.S. life expectancy following the COVID-19 pandemic, average life expectancy in the U.S. has risen by roughly 13 years since Social Security retired-worker payouts began in January 1940. Since we're living longer, waiting to take benefits may make sense.
With a more thorough understanding of why future claimants might choose ages 62 or 70 to take their payout, let's take a closer look at how much retired workers are bringing home at these two respective ages. Keep in mind that average benefits are based on the age of recipients in December 2022, not necessarily the age they claimed their Social Security retired-worker benefit. For instance, age 70 beneficiaries may have claimed their payout anywhere between ages 62 through 70.
Based on monthly data from the SSA's Office of the Actuary in December 2022, close to 566,000 aged 62 retired-worker beneficiaries took home $1,274.87. That compares to an average payout of $1,963.48 for the roughly 2.96 million retired-worker beneficiaries who were 70 years old in December 2022.
Although age 62 claimants can receive a check for eight years before age 70 claimants take home a dime from Social Security, the average monthly benefit at age 62 is 35.1% below what the average claimant took home at age 70.
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Patience is more than a virtue when it comes to maximizing what you'll receive from Social Security
The question is: Does it make sense to wait to take your Social Security retired-worker benefit?
Before diving into this question, let me preface it with the reality that there is no perfect claiming blueprint for Social Security retirement benefits. To ensure making an optimal claim, you'd need to know the date of your "departure." Since none of us (thankfully!) knows this, the best we can do is to take into account personal health, marital status, and financial needs when making an educated claims decision.
With the above in mind, researchers at online financial planning company United Income delved into this age-old question in 2019 to determine if there truly is a "best" claiming age. Using data from the University of Michigan's Health and Retirement Study, researchers extrapolated retired-worker claims from 20,000 beneficiaries to determine if they'd made an "optimal" decision -- one that resulted in the claimant getting the maximum lifetime income from Social Security. Understand that getting the most out of Social Security might not mean netting the largest monthly payout.
What United Income found was an easily identifiable inversion between actual and optimal claims. Although most beneficiaries chose to begin receiving their payout prior to reaching FRA, an extrapolated analysis found that waiting would have been a smarter move, from a financial perspective, for a majority of retired workers.
Only a mid-single-digit percentage of age 62 claimants, and a collective 8% of claimants aged 62 through 64, made an optimal claim, per United Income. By comparison, a whopping 57% of claims at age 70 would have been optimal.
Everyone's situation is going to be unique, and there isn't a one-size-fits-all blueprint that dictates when future retirees should take their benefit. If you have a chronic health condition that could shorten your life expectancy or are a lower-earning spouse, an early claim might make total sense.
But when Social Security retired-worker claim decisions are examined agnostically, waiting is beneficial more often than not. That's something for future generations of beneficiaries to keep in mind.
