Most people understand that the size of their eventual Social Security payments will be closely linked to the amount of taxable income they earn while working -- the more money you make (up to a point), the more you pay in FICA taxes, and the more you get from the program each month when you retire.
That's only one part of your future benefit calculation though, and given that our salaries are in large measure not under our control, it may not be the most consequential part.
What you'll have more control over is the age at which you initiate your Social Security retirement benefits, and that will be a major factor in their size as well. The younger you are when you claim, the smaller your checks will be. The longer you delay taking your payments, on the other hand, the bigger those checks will be.
With that in mind, here's a detailed look at how different your future Social Security checks would be at a range of filing ages.
Impatience is penalized
For a government-run program, Social Security is surprisingly flexible. You can claim your retirement benefits as soon as you turn 62 years old. Or, you can wait until you reach 70. Or you can file at any time in between those two points. It's up to you.
Just understand that in terms of your monthly check size, it pays to be patient.
Right now, what the government deems to be your full retirement age -- or FRA -- is at the tail end of a multiyear gradual increase. People who will reach their FRAs of either 66 years and 8 months or 66 years and 10 months in 2025 were born in either 1958 or 1959. For everyone born in 1960 or later, full retirement age is set to be 67 (barring any further changes to the program by Congress).
Those people who claim at their FRA will receive 100% of what the government calculates as their "primary insurance amount" (PIA) -- what you would think of as your "full" benefit.
For every month prior to your FRA that you file, however, your payment is reduced by 5/9 of 1% for the first 36 months early that you claim (or about 6.7% per year). Beyond that, it's 5/12 of 1% per month (or 5% per year).
Add that up, and a person with an FRA of 67 will wind up with a 30% monthly benefit reduction if they file for Social Security when they turn 62. Conversely, every month beyond your full retirement age that you wait to claim benefits adds an additional 0.66% to your future monthly payments, or 8% per year. These delayed retirement credits max out when you turn 70. For someone with an FRA of 67, that would result in a 24% bump in your monthly payment compared to your "full" benefit.
That's a 54-percentage-point swing from the minimum to the maximum possible payment, which isn't chump change. Or, put another way, compared to the amount you'd get by filing at 62, the amount you'd get by filing at 70 is about 77% higher.
For those hitting FRA this year, the results are slightly different, as the table below illustrates.
| Age at Initiation of Benefits | % of Primary Insurance Amount Received by Filers With an FRA of 66 and 10 months |
|---|---|
| 62 | 70.83% |
| 63 | 75.83% |
| 64 | 81.11% |
| 65 | 87.78% |
| 66 | 94.44% |
| 66 years and 10 months (FRA) | 100.00% |
| 67 | 101.33% |
| 68 | 109.33% |
| 69 | 117.33% |
| 70 | 125.33% |
Data source: Social Security Administration
But what does all this mean in more practical terms?
No two Social Security benefits calculations are exactly the same. We can get a pretty good feel for how one's retirement benefits can change based on filing age, however, by using the current average Social Security payment of $1,976 per month as a baseline.
If that were the amount someone claiming at their full retirement age would be due, the adjusted amount for claiming at 62 would be just $1,400 per month. At the other end of the spectrum, waiting an additional three years and two months to file for benefits would pump their future monthly payments up to about $2,477 (in today's dollars).
| Age at Initiation of Benefits | Expected Monthly Payment for a Person With a PIA of $1976 |
|---|---|
| 62 | $1,400 |
| 63 | $1,498 |
| 64 | $1,603 |
| 65 | $1,743 |
| 66 | $1,866 |
| 66 years and 10 months (FRA) | $1,976 |
| 67 | $2,002 |
| 68 | $2,160 |
| 69 | $2,318 |
| 70 | $2,477 |
Data source: Social Security Administration
That's a difference of more than $1,000 per month for waiting as long as possible to claim versus filing for your benefits as soon as possible.
The Social Security Administration doesn't really mind which choice you make, by the way. People who start taking payments earlier will collect smaller monthly payments, but get more of them. People who claim later will receive fewer payments, but larger ones. The formula is designed to keep each retiree's likely lifetime net benefit from the program about the same, assuming they have an average lifespan.
Different dollar figures, same idea
These are only hypothetical examples, of course. Your full monthly benefit will be specific to you, based on your earnings history. Therefore, the differences between what you'd get for claiming at 62 or 70 will also be different dollar amounts.
For most people, the numbers won't be dramatically different from the average, though, and the percentages involved won't be any different at all. The Social Security Administration uses the same mathematical formula to adjust for early or delayed filing no matter how much you'd be due if you claimed exactly at your particular FRA.
Image source: Getty Images.
Also, note that the ongoing increases in the full retirement age will stop once it reaches exactly 67 in 2027. From that point forward, the FRA will be a full 67 years for anyone born in or after 1960. This will change some of the numbers found in the tables above, but only slightly... certainly not enough to require altering any retirement plans you may have already made.
You should also know that in addition to there being no additional benefit for waiting beyond the point you turn 70 to claim benefits, there's good reason to apply as soon as you can after that birthday. Although the Social Security Administration will retroactively pay you the money you could have begun receiving when you reached 70, that only applies to up to six months' worth of benefits. If you wait seven or more months after you turn 70 to initiate benefits, you're losing money.
By the way, the Social Security Administration has already made some educated guesses about the specific monthly payments you will be due at every age from 62 to 70. You can review these estimates at the Social Security website.
