One of the biggest decisions American retirees face is when to start Social Security.
Social Security is the cornerstone of many people's retirement budgets. Nearly 9 out of 10 retirees say their monthly benefit is a significant source of income, with two-thirds of those saying it's a major source of income, according to an annual Gallup poll. As such, making the most of the Social Security benefits available to you should be a top priority.
While most people can claim Social Security retirement benefits starting at age 62, the data point to a specific age where it makes sense for the average retiree to claim. Three independent sources agree: All else being equal, retirees should wait until 70 to claim their Social Security retirement benefits in order to maximize their budgets in retirement.
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The benefits of waiting until 70
There are a couple of factors that make waiting until 70 beneficial for many retirees.
First, you'll receive delayed retirement credits for every month you wait to take benefits beyond your full retirement age. Your check will increase by 2/3 of a percentage point for every month you delay until age 70. That means someone born in 1960 or later with a full retirement age of 67 can receive a 24% boost to their monthly payment just by waiting three extra years to start their benefits.
Second, the annual cost-of-living-adjustment (COLA) is based on your total payment, so delaying your benefits can compound over time. Not only do you benefit from the COLA while you're delaying your claim, but you also get that adjustment on the bigger check you receive once you start collecting. Over a lifetime, that adds up to a significant amount of money.
A deep dive into the data
The crux of determining the best age to take Social Security typically comes down to predicting how long you'll live. If you knew exactly when you'll pass away, it would be possible to calculate the exact month you should take Social Security to maximize your lifetime benefit. (You should also probably just buy a lottery ticket if you can predict the future that well.)
Given predictions are difficult, especially about the future, the next best thing we can go on is studies of the general population. The Centers for Disease Control and Prevention (CDC) periodically publishes life expectancy tables based on current mortality patterns. That's a great start. Some researchers, such as United Income and Laurence Kotlikoff, combine longevity estimates with survey data about retirement spending and other financial considerations to determine an optimal age for claiming benefits.
The CDC data point to 70 as the optimal age to claim Social Security based on life expectancy. That's based on break-even ages, or the age you'd have to live to in order to justify delaying your Social Security benefits. The break-even age for someone delaying benefits from their full retirement age to age 70 is 82 1/2 years old. Meanwhile, the CDC data suggest the average 66- or 67-year-old will live beyond 84 years old. The average 70-year-old will live beyond 85.
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A study by Laurence J. Kotlikoff, David Altig, and Victor Yifan Ye published in 2022 took data from multiple surveys and integrated the impact of taxes and spending to determine the optimal ages for retirees. The researchers found 90% of Americans between the ages of 45 and 62 should wait to claim their retirement benefits until age 70. Doing so would increase their lifetime spending by more than 10%.
United Income's findings are the least absolute, but there's still a heavy bias for waiting until 70 to claim. The group's study combined historical data across multiple decades with its own longevity and spending estimates to determine the best way for retirees to maximize their overall wealth and spending budgets. They found that 57% of retirees would maximize their benefits by waiting until 70 to claim Social Security.
Is waiting until 70 for you?
The studies above should only be a starting point for determining the best age for you to claim Social Security. They suggest 70 is the best age for the average retiree, but very few people are actually average.
Your circumstances may dictate a very different claiming strategy. The most common reasons to claim benefits earlier are either a health diagnosis that curbs your life expectancy or an unplanned retirement and a financial need for supplemental income.
In the former scenario, you may want to claim early to make the most of the years you have left, but you may also need to consider your survivor(s) and how claiming your personal benefit early could impact their benefits down the line.
In the latter, you may want to go back to work but currently face financial hardship. The good news is if you can return to work, the Social Security Administration makes it possible to withdraw your application within a year of your initial claim or suspend your benefits upon reaching full retirement age. You'll also need to be wary of the retirement earnings test, which could impact your monthly benefits, but potentially work in your favor if your aim is to delay more of your benefits. So, if you're in need and actively looking to get back to work, don't be afraid to claim early.
Everyone's circumstances are different, but the data show that 70 years old is far and away the best age for most retirees to claim Social Security.
