For more than eight decades, Social Security has served as a financial foundation for our nation's aging workforce. Based on more than two decades of annual surveys from national pollster Gallup, anywhere from 80% to 90% of then-current retirees are reliant on their monthly Social Security check, in some capacity, to make ends meet.
Given how important Social Security income has historically been to the financial well-being of retired workers, it's imperative to get as much as you can out of America's top retirement program. But in order to maximize what you'll receive, you'll first have to understand the dynamics of how your benefit is calculated, as well as how your claiming age can drastically affect what you'll receive each month and during your lifetime.
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These are the four "puzzle pieces" used to calculate your Social Security check
Although Social Security is a complex program that comes with its own set of quirks, such as the potential for the federal taxation of benefits and the possibility of penalties for early filers, the four "puzzle pieces" used by the Social Security Administration (SSA) to calculate your Social Security check are straightforward:
- Work history
- Earnings history
- Full retirement age
- Claiming age
The first items the SSA uses to determine how much retired workers will receive each month are their work history and earnings history. The SSA takes into account a worker's 35 highest-earning, inflation-adjusted years. This means workers who earn a higher average annual wage/salary throughout their lifetime can likely expect a larger Social Security check during retirement.
Just keep in mind that for every year less than 35 worked, the SSA will average a $0 into your calculation. If you're planning to be reliant on Social Security to cover a meaningful percentage of your monthly expenses, you'll want to work at least 35 years to give yourself an opportunity to maximize your payout.
The third factor used by the SSA to calculate your retired-worker benefit is your full retirement age. This is the age you become eligible to receive 100% of your monthly payout, and it's determined by the year you're born. It's the only factor of the four that you have no control over.
The fourth and final puzzle piece needed to calculate your Social Security benefit is your claiming age. Of the four factors listed, it's the one that has the potential to really swing your monthly and/or lifetime payout higher or lower.
Though retired workers can begin receiving their Social Security payout as early as age 62, the program strongly incentivizes patience. For every year a retiree waits to claim their benefit, beginning at age 62 and continuing through age 69, their payout 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 66 and 70?
Depending on your birth year and claiming age, early filers could be staring down a 30% permanent reduction to their monthly benefit check. Meanwhile, those who are patient could receive anywhere from 24% to 32% more than what they were due at full retirement age.
Although there's no one-size-fits-all blueprint as to when to claim Social Security benefits, ages 66 and 70 are likely to grow in popularity for a variety of reasons.
There are two factors that make age 66 such a popular claiming choice for retirees. To start with, it's the literal middle ground spanning the traditional claiming age range of 62 through 70. Future retirees willing to wait four years, post-eligibility, to take their payout will be rewarded with a considerably smaller permanent monthly benefit reduction. A middle-ground claim allows retirees to access their payout while they're still young enough to enjoy it.
Additionally, age 66 is a psychologically important claiming age. For persons born between 1943 and 1954, it represented their full retirement age.
In comparison, the lure of an age 70 claim is that it maximizes the monthly benefit a retired worker can receive. Since the majority of today's labor force was born in or after 1960, an age 70 claim would result in a 24% increase over what they'd have received at full retirement age.
The other advantage of an age 70 claim is that we're living considerably longer than we were when Social Security retired-worker benefits were first mailed out in January 1940. As life expectancies have risen, there's an increased incentive to hold off on taking your retired-worker payout.
Now that you better understand the factors that might encourage retirees to claim their benefit at ages 66 or 70, let's take a closer look at what beneficiaries are currently bringing home each month at these respective ages. Keep in mind that average benefit data is based on the age of the recipient, as of December 2022, and isn't necessarily indicative of their claiming age -- for example, an age 66 retired-worker beneficiary may have claimed their payout anywhere from age 62 through age 66.
According to data from the SSA's Office of the Actuary, the roughly 2.27 million aged 66 retired-worker beneficiaries brought home $1,719.85 in December 2022. In comparison, close to 2.96 million aged 70 retired-worker beneficiaries received an average check of $1,963.48.
In other words, beneficiaries at age 66 were taking home 12.4% less than their counterparts at age 70.
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Waiting has its rewards when it comes to claiming Social Security benefits
This double-digit percentage disparity in average monthly payout begs the question: Which age is best to claim Social Security?
While I'll reiterate that there's no blueprint that guarantees you'll maximize what you receive from Social Security, a study conducted five years ago does shed light on the best possible claiming ages for future retirees.
In 2019, researchers at online financial planning company United Income released a study that used data from the University of Michigan's Health and Retirement Study to analyze the claiming decisions of 20,000 retired workers. The goal for United Income was to extrapolate these claims to determine if retirees had made an "optimal" choice -- one that produced the highest lifetime income for the claimant.
The prevailing finding from this study was that only a very small percentage of the 20,000 claimants made an optimal decision. Considering that none of us knows our "departure" date, which would need to be known ahead of time to make a surefire Social Security claiming decision, a low percentage of optimal claims isn't too much of a surprise.
However, the breakdown of which claiming ages would have proved optimal certainly does stand out. According to United Income, only a combined 8% of claims from ages 62 through 64 proved optimal.
Meanwhile, an overwhelming 57% of age 70 claims would have generated the maximum lifetime income for the 20,000 retired-worker claims analyzed. For context, age 66 was the fifth most optimal claiming age, behind ages 70, 67, 69, and 68, in that order.
This doesn't mean that waiting until age 70 is going to be the right move for everyone. People who have one or more chronic health conditions that could shorten their lifespan, or lower-earning spouses, might benefit from an earlier claim. Ultimately, your personal health, financial needs, and marital status will play an important role in deciding when to begin receiving retired-worker benefits.
But what United Income's study does show is that waiting has its rewards more often than not. For a majority of future retirees, a claim made at or after full retirement age will likely give them the best chance to maximize what they'll receive from America's top retirement program.
