Workers who qualify for Social Security retirement benefits can choose to apply at any point between the ages of 62 and 70. For those born in 1960 or later, full retirement age for Social Security purposes is 67 years old, and this is the age at which you can get your full Social Security benefit.
If you choose to claim Social Security before full retirement age, your benefit can be permanently reduced. Claiming at 62 when your full retirement age is 67 can result in a 30% reduction. However, although your monthly checks will be lower, you'll end up receiving payments for a greater number of years.
On the other hand, waiting until after your full retirement age will result in a permanently increased retirement benefit. Waiting until 70 can result in 24% more Social Security income, but the trade-off is that you'll receive benefits for fewer years. So, what is the best age to claim Social Security?
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What do the statistics say?
The average life expectancy for a 62-year-old American male is 83.6 years old, and for 62-year-old females, it is 86.5. That means that after you reach the age of 62, the statistics say that you'll live another 21.6 years (male) or 24.5 years (female).
We can use this to determine the statistically ideal Social Security claiming age as follows. To keep the numbers simple, we'll use an expected $2,000 monthly benefit at full retirement age, and that your full retirement age is 67, meaning that you were born in 1960 or later. First for men:
|
Claiming Age |
Monthly Benefit |
Years of Benefits |
Total Amount Received |
|---|---|---|---|
|
62 |
$1,400 |
21.6 |
$362,880 |
|
67 |
$2,000 |
16.6 |
$398,400 |
|
70 |
$2,480 |
13.6 |
$404,736 |
Data source: author's own calculations.
Now let's look at how the higher average life expectancy of women affects the numbers:
|
Claiming Age |
Monthly Benefit |
Years of Benefits |
Total Amount Received |
|---|---|---|---|
|
62 |
$1,400 |
24.5 |
$411,600 |
|
67 |
$2,000 |
19.5 |
$468,000 |
|
70 |
$2,480 |
16.5 |
$491,040 |
Data source: author's own calculations.
The takeaway is that statistically, you'll get the most lifetime benefits from Social Security if you wait until age 70 to start collecting your benefits.
There's no perfect claiming age for everyone
It's important to emphasize that the numbers in these charts are averages. There's a good reason why Social Security benefits can be claimed at any point between ages 62 and 70 -- because different people have different life circumstances to consider. While it can certainly make sense to wait until 70 and maximize your monthly income, it can also make perfect sense to start collecting Social Security at 62 in many cases.
With that in mind, here are a few things to consider when deciding when to apply for Social Security:
- Your financial situation. The most obvious reason to claim Social Security sooner rather than later is that you need the money. On the other hand, if you have substantial retirement assets, it could make sense to live off of your savings in your first few years of retirement and let your Social Security benefit grow. After all, for many people, Social Security is the only inflation-protected source of retirement income, so it can make sense to maximize it.
- Your health. Many people who plan to wait until 70 to start collecting Social Security don't quite make it there, and one big reason is health concerns. If your health causes you to leave the workforce earlier than you had planned, or causes you unplanned financial burden, Social Security can be a part of the solution. It's also wise to consider your family history, as a history of longevity could mean you'll get more from Social Security by waiting.
- Employment. There are two main reasons Americans tend to claim Social Security earlier than planned. The first is health, and the other is employment. For example, if you plan to start collecting Social Security at 67 but you end up getting laid off at 65, it might prompt you to apply early.
- Family situation. There are a lot of family dynamics you might want to consider. For example, if you collect Social Security retirement benefits and have young children, they can get benefits too. Or, did you know that there's no delayed retirement increase for spousal benefits, so if your spouse anticipates getting a benefit from your work record, it rarely makes sense for you to wait beyond their full retirement age.
Of course, this isn't an exhaustive list of things to consider. And even after you consider all of these things, there might not be a perfect answer. The best course of action is to take a close look at your overall retirement situation and decide which age to start Social Security makes the most age for you.
