As this year began, retired-worker beneficiaries were bringing home an average monthly Social Security check of $1,975.34. Though this is a relatively modest amount of monthly income, it's proven pivotal to helping retirees make ends meet.
Since 2002, national pollster Gallup has surveyed retirees annually to gauge their reliance on America's leading social program. The April 2024 study showed that 88% of respondents leaned on their payout, in some capacity, to cover their expenses. This is consistent with the previous 22 years of polling, which found that 80% to 90% of retirees rely on their monthly payout to some degree.
In other words, Social Security isn't just a check -- it's a bedrock that much of America's aging workforce counts on for financial support. For most future retirees, it'll be imperative to get as much as possible out of Social Security.
But to ensure you're receiving as much as you can from America's leading retirement program, you'll first need to understand the ins-and-outs of how your benefit is calculated, including the role claiming age plays in swinging the monthly and lifetime payout pendulum. This is the only way to know if claiming early (age 62), taking a middle-ground approach (age 65), or being patient (age 70) is the best choice for you.
Image source: Getty Images.
These four elements are used to calculate your monthly Social Security check
Although government programs aren't always known for being easy to understand, the four elements the Social Security Administration (SSA) uses to calculate your monthly payout are as straightforward as they come:
- Earnings history
- Work history
- Full retirement age
- Claiming age
Earnings history and work history collectively refer to the SSA taking your 35 highest-earning, inflation-adjusted years into account when calculating your monthly benefit. By "earnings," the SSA means wages and salary, not investment income. If you average a higher wage or salary over multiple decades, you'll be in a better position to receive a larger Social Security check during retirement.
On the flipside, the SSA penalizes retirees who don't have at least 35 years of work history. For every year less than 35 worked, the SSA will average a $0 into your calculation.
The third variable is the full retirement age, which represents the age at which you become eligible to receive 100% of your retired-worker benefit. Your full retirement age is entirely determined by the year you're born.
The fourth and final element is the age at which you choose to begin collecting your retired-worker benefit. Even though this benefit can be claimed as early as age 62, there's a dynamic scale that incentivizes patience. For every year a worker waits to collect their benefit, it 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.
There are clear pros and cons associated with collecting benefits at 62, 65, and 70
Even though monthly payouts can vary wildly, there are well-defined advantages and drawbacks associated with every age in the traditional claiming range of 62 through 70.
However, 62, 65, and 70 should be among the most popular claiming ages moving forward. Let's briefly examine the pros and cons associated with initially collecting retired-worker benefits at these respective ages.
Age 62: There's no greater lure of taking benefits at age 62 than not having to wait to get your hands on your payout. This can be potentially helpful if you're out of work or trying to pay down debt.
According to the annual Social Security Board of Trustees Report, there's also the possibility of the Old-Age and Survivors Insurance Trust Fund (OASI) exhausting its asset reserves by 2033. If the OASI's asset reserves are depleted, current projections call for sweeping benefit cuts of up to 21% for retired workers. Taking your payout at 62 can be viewed as a way to front-run the possibility of benefit reductions.
The downside of claiming at age 62 is that, depending on your birth year, you're accepting a permanent reduction to your monthly payout of 25% to 30%.
Furthermore, early filers can be exposed to other penalties, such as benefit withholding by the SSA, courtesy of the retirement earnings test.
Age 65: The advantage of the middle-ground approach of initially collecting at age 65 is that it minimizes the monthly payout reduction associated with claiming before reaching full retirement age. Depending on your birth year, claiming at age 65 can lower your monthly payout by 6.7% to 13.3%, relative to full retirement age.
Something else favorable about taking benefits at age 65 is that you'll still be young enough to enjoy the added income you'll receive from Social Security.
However, age 65 claimants may regret their decision if they live well into their 80s, if not beyond. Initially taking benefits at 65 and living decades longer can result in a lot of Social Security income being left on the proverbial table.
Recipients who are 65 years old also haven't yet reached their full retirement age, meaning they can be exposed to partial or full benefit withholding via the retirement earnings test.
Age 70: The clearest advantage of waiting until age 70 to collect benefits is that you'll maximize your monthly check. Age 70 recipients receive 24% to 32% more than what they would have netted at their full retirement age (once again, depending on their birth year).
However, the disadvantage of waiting to initially collect at age 70 is that there's no guarantee you'll also maximize your lifetime payout -- and collecting as much as possible during your lifetime should be the goal.
Image source: Getty Images.
Statistically, one claiming age is likeliest to maximize your lifetime payout from Social Security
With a clearer understanding of the dynamics that influence initial collection ages, let's return to the all-important question at hand: Is it better to collect Social Security at 62, 65, or 70?
A comprehensive study on claiming ages that was released six years ago by the researchers at United Income can answer this question.
In The Retirement Solution Hiding in Plain Sight, United Income analyzed the Social Security claims of 20,000 retired workers using data from the University of Michigan's Health and Retirement Study. Researchers aimed to determine if one or more claiming ages were "optimal" in the sense of maximizing lifetime benefit collection from Social Security.
United Income's first major takeaway is that most retirees fail to collect as much as possible from Social Security. Only 4% of the 20,000 retired workers studied had optimized their payout.
There are good reasons why optimizing your benefit is difficult. For one, we (thankfully) don't know our departure date ahead of time, which is something we'd need to know to ensure we maximize lifetime benefit collection.
Additionally, everyone has their own unique path they walk to get from Point A to B. This means your financial needs, access to retirement savings/accounts, tax implications, personal health, marital status, and so on will be unique to you when you retire. Without a one-size-fits-all blueprint, there will be some educated guesswork involved when determining which age is best for initially collecting your retired-worker benefit.
However, United Income did discover an interesting inversion between actual and optimal claims. Whereas most claimants skewed early with their initial collection, the highest probability of maximizing lifetime benefits was found at the latter end of the curve.
For instance, 79% of the retired workers studied took their initial Social Security benefit at age 62, 63, or 64. Yet United Income found that only 8% of workers would have optimized their lifetime payout at 62, 63, and 64, on a combined basis! In fact, ages 62 through 65 (not in this order) were the four ages least likely to ensure you got the most out of Social Security.
In comparison, United Income discovered that 57% of the 20,000 retired workers would have gotten the most out of Social Security had they waited until age 70 to collect their benefit.
Though there are always going to be scenarios where an early claim makes sense -- such as poor health that could shorten your life expectancy -- this extensive study makes it clear that waiting will be beneficial for a majority of future retirees.
