Statistics Say: This Is the Best Age to Claim Social Security

If you've learned anything about Social Security, you probably have some big questions -- such as, is it running out of money? And when should I claim my benefits? The answer to the first question is yes -- the program's surplus is turning into a deficit, and, if nothing is done, benefits may shrink by 23% around 2035.

The answer to the second question is more complicated -- but a 2019 study offers a compelling answer.

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Social Security basics

First, understand that each of us has a full retirement age at which we can start collecting the full benefits to which we're entitled based on our earnings. (Benefits are calculated based on your earnings in the 35 years in which you earned the most.) Most of us have a full retirement age of 66 or 67 -- it's 67 for those born in 1960 or later.

When to start collecting your benefits is a big decision. Those who start collecting benefits early will receive smaller benefit checks -- but they'll receive many more of them. Those delaying beyond their full retirement age will increase their benefit checks by about 8% for each year until age 70. The table below shows the percentage of the full benefits you'll receive at each starting age:

Source: Social Security Administration.

So, when should you claim your benefits? Well, know that those who live average-length lives will collect roughly the same total benefits no matter when they start collecting. But we're not all average, are we?

When should you claim your Social Security benefits?

Here are some good reasons to claim early -- or late.

Reasons to claim early

• You expect to live an average-length life. If so, it may not matter that much when you claim your benefits. (Unless you turn out to have been wrong.)
• You need -- or want -- that money as soon as possible. By claiming early, you may be able to afford to retire, travel, or pay down debt -- among other possibilities.
• You don't trust that Social Security will be around later. If you think there's a good chance that Social Security will change for the worse in the coming years, you might want to start grabbing what you can.
• You're coordinating with your spouse. Married folks can enact various strategies with Social Security. For example, the higher earner might try to delay claiming until age 70 while the lower earner collects earlier. This can supply some income early, while you maximize the bigger benefit -- so that when one spouse dies, the survivor will get to keep that maximized benefit.
• You're suddenly out of the workforce, and until you can enroll in Medicare at age 65, you need to extra income to pay for health insurance. (The cost of healthcare is a big-ticket item in every retiree's budget.)

Reasons to delay claiming your benefits

• You're financially healthy and able to wait until age 70 to maximize your benefits. (Perhaps you're still working!)
• You stand a decent chance of living a longer-than-average life.
• You might be coordinating with your spouse and aiming to maximize your benefit, which your spouse can later claim if you die first.
• By maximizing your checks, you'll also get more out of every cost-of-living adjustment (COLA).

What the experts say

You may still be confused. (Note that you can always split the difference and claim your benefits at your full retirement age.)

Here's some more authoritative guidance from a 2019 study, "The Retirement Solution Hiding in Plain Sight: How Much Retirees Would Gain by Improving Social Security Decisions," from the folks at United Income.

The study found that:

• Many millions of people claim their benefits too early and thereby leave trillions of dollars in potential total Social Security benefits on the table -- an average of $111,000 per household.
• The average retiree would collect about 9% more retirement income from Social Security if they claimed their benefits at an optimal age.
• Only 4% of retirees seem to have claimed their benefits at the best time.

So, what's the optimal age? Well, it does vary by person, but this study found that "About 57% of retirees would build more wealth through their life if they waited to claim until they were 70 years old."

There you have it -- a clear and solid recommendation. But hold on -- it's true not for 99% of us or even 75% of us, but only for 57%. Yes, that's a majority, but it leaves 43% with some other optimal claiming age.

Really, each of us should be deciding on our own when to turn on the Social Security spigot. Weigh the reasons above carefully to claim early or late. And don't be afraid to consult a financial advisor, as this decision has major financial ramifications.