You're ready to apply for Social Security. You may have even worked out a lot of the logistics -- what documents you need to apply, what day you can expect your first check -- but you don't yet know how much you'll actually receive from the program.
It might seem like complicated math that's way over your head, but the truth is, it's not that difficult to estimate how much you'll get from Social Security. Doing so before you apply is essential if you hope to maximize your lifetime benefit.
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Why your claiming age matters
Your claiming age matters for two reasons. First, it determines whether you're eligible for checks. You must be at least 62 years old to get retirement benefits. But that's not defined in the way people think. The Social Security Administration only considers you 62 during your birth month if your birthday is on the 1st or 2nd.
For example, if you were born on Aug. 1 or Aug. 2, 1963, you could claim benefits for August. If you were born on any other day of that month, you don't become eligible until September. This is critical information if you're signing up as soon as possible, because you'll need to fund your expenses on your own until your checks start arriving. Keep in mind that checks are also paid in the month after they're due, so a September check wouldn't arrive until October.
The other reason your claiming age matters is because it determines what sort of early claiming penalty or delayed retirement credit you get. The Social Security Administration assigns everyone a full retirement age (FRA) based on their birth year. It's 67 for most people today. This is your baseline. If you claim in the month you turn 67, you'll get the benefit you've earned based on your work history, known as your primary insurance amount (PIA).
Claiming before this age reduces your PIA by up to 30%. More specifically, you lose 5/9 of 1% per month for your first 36 months of early claiming and then 5/12 of 1% per month thereafter.
Delaying Social Security increases your PIA by 2/3 of 1% per month, or 8% per year, until you turn 70. This could grow your checks by 24% if your FRA is 67.
Often, delaying checks until 70 maximizes your household income, but this isn't always true or feasible. Those with short life expectancies may benefit more from claiming early, while those with little savings who are unable to work may not be able to afford to delay benefits. Still, it's worth exploring all your options before deciding when you want to claim.
The easiest way to decide when to claim Social Security
You can view estimates of your Social Security benefit at every possible claiming age in your my Social Security account. If you don't already have one, you can set one up for free in a few minutes. You'll need to choose a username and password and answer some identity verification questions.
Once that's done, you'll be able to log in and view a chart detailing your estimated monthly benefit at every possible claiming age. You can also estimate your spousal benefit if you're married and you know your partner's benefit at their FRA.
Multiply your monthly benefit for your planned claiming age by 12 to get your estimated annual benefit. Then, multiply this amount by the number of years you expect to claim Social Security to estimate your lifetime benefit. For example, a $2,000 monthly benefit claimed for 20 years gives you a $480,000 lifetime benefit. Then, compare this to what you'd get if you waited a little longer.
Choose the age you're most comfortable with. This might mean waiting until you qualify for a larger benefit. Or it could mean claiming earlier, as long as you understand the trade-offs. It doesn't take that long, and reviewing all your options ensures you don't miss a simple opportunity to improve your financial security in retirement.
