Social Security can be complicated and confusing at times, but it can make or break retirement for many older adults.
More than 80% of nonretired adults say they'll be relying on their benefits to some degree in retirement, according to a 2023 poll from Gallup, and 34% of that group says that Social Security will be a major source of income. If you're not making the most of your benefits, it could potentially put your retirement at risk.
While there's no single correct way to maximize Social Security, there is one mistake that costs the average retired household around $111,000 in lifetime income: claiming at the wrong age.
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How your age affects your benefit amount
The age you file for Social Security will directly impact the amount you receive each month. Your full retirement age (FRA) is the age at which you'll receive the full benefit you're entitled to, based on your work record, and while it will vary based on your birth year, it's age 67 for anyone born in 1960 or later.
You can file before or after your FRA, but it will affect the size of your checks. The earliest you can begin claiming is age 62, but by filing at that age, your benefit will be reduced by up to 30%. You can also delay benefits past your FRA, which will earn you a bonus of at least 24% per month on top of your full benefit if you wait until age 70 to file.
In some cases, claiming at the less-than-ideal age could cost you thousands of dollars. Researchers at United Income studied retirees' claiming decisions and how those choices affected their lifetime income. They then determined how many retirees filed at the "optimal" age to earn as much as possible from Social Security over a lifetime.
Researchers found that only 4% of retirees claimed at the optimal age, and the average retired household misses out on around $111,000 worth of lifetime income by claiming at a suboptimal age.
What's the best age to take Social Security?
According to the United Income study, around 57% of retirees could have earned more over a lifetime by waiting until age 70 to file, while 6.5% would have collected more by filing before age 64.
On the surface, then, it seems like age 70 is the ideal time to take Social Security for most people. Although that can be the best option in some cases, there's more to consider than simply finances.
Age 70 can be the best time to file if you're looking to maximize your monthly income. Again, delaying until this age will earn you a bonus of at least 24% on top of your full benefit, which could boost your benefits by hundreds of dollars per month.
If your main priority is to retire sooner, though, claiming early could be your best bet. You can retire early and delay benefits, but you'll need to rely on other sources of income in between -- which risks depleting your savings too quickly. By filing early, you can retire sooner and have some extra income to make ends meet.
Claiming early can also be a smart move if you have reason to believe you'll live a shorter-than-average life span. While you'll still receive smaller payments each month, you could collect more in total than you would by waiting until age 70 to file.
The best age to take Social Security will depend largely on your situation. Delaying until age 70 can help maximize your monthly income and potentially help you collect more over a lifetime. But finances are only one part of the equation, and there are valid reasons to file early, too.
By considering your unique circumstances, you can decide on the best age for you.
