Leading up to retirement, there are plenty of important decisions you need to make, including when you claim Social Security. This isn't a decision that should be taken lightly, either, because it will permanently affect how much you receive in benefits. And considering how valuable Social Security is to millions of Americans' retirement income, you don't want to find yourself leaving money on the table.
Your full retirement age is when you're eligible to receive your base monthly benefit, called your primary insurance amount (PIA), but you can claim before then (beginning at age 62) or delay claiming past that age.
There are pros and cons to claiming at your full retirement age, early, and late. So, what exactly is the best time to claim? Let's see what the statistics say.
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How your claiming age affects your monthly benefit
Claiming benefits before your full retirement age will decrease them by 5/9 of 1% monthly, up to 36 months. Each additional month after that will further reduce benefits by 5/12 of 1% monthly. Assuming your full retirement age is 67, below is how much benefits are reduced based on claiming age:
| Claiming Age | Benefit Reduction |
|---|---|
| 66 | 6.7% |
| 65 | 13.3% |
| 64 | 20% |
| 63 | 25% |
| 62 | 30% |
Source: Social Security Administration.
If you delay claiming benefits past your full retirement age, your benefit is increased by 2/3 of 1% monthly, or 8% annually. This means delaying benefits until 70 will result in a 24% increase. After age 70, benefits are no longer increased by delaying, so that's realistically the latest age you should claim.
What is the best age to claim Social Security?
In a 2022 paper published by the National Bureau of Economic Research (authored by David Altig, Laurence J. Kotlikoff, and Victor Yifan Ye), it was noted that "virtually all American workers age 45 to 62 should wait beyond age 65 to collect."
The same study went on to say that more than 90% of Americans should wait until age 70 to claim benefits, though only 10.2% of people do so.
Why waiting until 70 is ideal for most people
The main reason studies show it's better to claim benefits at 70 comes down to your break-even age and lifetime benefits. In Social Security, your break-even age is when the lifetime benefits you earn by claiming at one age equal those of another age.
For example, the break-even age between 62 and 70 is around 80.4. Before that age, you would've received more lifetime benefits by claiming at 62. After that age, you would receive more lifetime benefits by claiming at 70.
According to Social Security, men who reach age 62 have a life expectancy of 81.61, while women at age 62 have a life expectancy of 84.50. This means that if you're debating whether to claim at 62 or 70, claiming at 70 will result in more lifetime benefits for most people because they'll live past the break-even age.
In the above-mentioned study from the National Bureau of Economic Research, it was noted that delaying until age 70 would result in the average recipient receiving 10.4% more in benefits in their lifetime.
Always keep your personal situation in mind
Despite what the study and statistics say, you always want to keep your personal situation in mind when deciding when to claim Social Security.
As an example, suppose you have health issues or a history of family health issues. In that case, it may make sense to claim early to take advantage of your benefits as soon as possible. Or, if Social Security will be all or a large part of your retirement income, then maybe claiming earlier is the only option to ensure you have money coming in.
However, if Social Security will only be a relatively small portion of your retirement income, then you likely have more of a luxury of delaying claiming until later ages.
In either case, the best claiming age is the one that makes sense for your personal situation.
