Most Americans claim Social Security at or before their full retirement age, and the most popular age for claiming benefits is 62. So, if you're approaching retirement age, chances are good that you've considered filing early. However, before you do, you need to be fully aware of the permanent effects of early retirement.

The average age Americans start Social Security
According to a report by the Center for Retirement Research at Boston College, 90% of Americans begin collecting Social Security retirement benefits at or before their full retirement age. The most popular age to start is 62, the earliest age possible -- chosen by 42% of men and 48% of women.

By age and gender, here's when Americans begin collecting Social Security:

Age When Starting Benefits

% of Men

% of Women



















Data source: Center for Retirement Research.

Using a weighted average of the data in this chart, we can approximate the average American's age when starting Social Security as 64 years old.

The effects of early or late retirement
As many people know, collecting Social Security benefits early will permanently reduce the monthly amount, while choosing to delay benefits has the effect of a permanent increase. Let's take a look at exactly how much this increase or decrease is, and how it impacts the average American's retirement income.

Collecting Social Security early results in a benefit reduction of 6.67% per year for up to 36 months before full retirement age and a rate of 5% per year beyond that. Since the current Social Security full retirement age is 66, this means that someone who chooses to file for Social Security at 62 in 2016 will have their monthly benefit reduced by 25% from their primary insurance amount (their benefit at full retirement age).

Conversely, choosing to delay benefits after full retirement age has the effect of an 8% increase per year, and this delayed retirement credit can accumulate until as late as age 70. So, waiting as long as possible would result in a Social Security increase of 32% for life. Now, some people simply cannot wait that long for one reason or another (health, losing a job, etc.), but it's surprising that only about 3% of retirees take full advantage of this dramatic increase in income.

Age when filing for Social Security

Change in benefits from full amount



















For the average American who claims Social Security benefits at 64, their monthly checks are reduced by 13.3%. The average Social Security retired worker receives $1,344.70 per month as of February 2016, so this implies that someone with the average benefit could see their income rise to $1,551 per month by waiting until full retirement age. What's more, by waiting until 70, this would translate to a $2,047 monthly payment. That's a big difference.

What it means to you
Depending on who you ask, experts generally say that you should plan to need 75% to 80% of your pre-retirement income to maintain your standard of living. This isn't a set in stone rule, and many people can maintain their standard of living for less by strategically eliminating some expenses (like their mortgage and car payments) before retirement.

With that in mind, we'll use 75% of pre-retirement income for a general rule, just to see how Social Security planning can play an important role in your retirement plan. So, to estimate your retirement income needs, multiply your current household income by 75%.

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Your retirement income will come from a combination of your savings, pensions (if any), and Social Security. While it's just a rule of thumb, you can reasonably expect to withdraw 4% of your savings per year, adjusting in future years for inflation, without fear of running out of money.

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To determine what your income need will be from Social Security, subtract your income from savings as well as any pension income from your retirement income that you calculated earlier.

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Finally, you can estimate your full Social Security retirement benefit in several ways, but the easiest way is to create an account at and view your most recent Social Security statement. Here, you'll find an estimate of your retirement benefit, as well as some other valuable information.

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An example
For example, let's say that you and your spouse's combined income is $100,000, which translates to a retirement income need of $75,000. For the sake of keeping this example simple, we'll say that you've saved a total of $1 million and don't have any pensions. So, your income from savings will be $40,000 per year.

This translates to a retirement income need of $35,000 from Social Security. When looking at your and your spouse's Social Security statements, you see that you can expect $2,500 per month, or $30,000 per year, if you retire at full retirement age. This translates to a 16.7% difference, so if you choose to delay retirement by a little over two years, it could make up the difference and provide adequate retirement income.

The bottom line on claiming Social Security
As I mentioned before, these estimations aren't set-in-stone rules, and if your retirement expenses are low or you're willing to accept a slightly lower standard of living, you may not need to delay Social Security.

My point, however, is to get you thinking about how the age at which you claim Social Security fits into your overall retirement strategy -- specifically, how delayed Social Security means you won't need as much savings, and more savings means you might be able to claim Social Security earlier without sacrificing quality of life. Whether you claim early, on time, or late, it's important to be aware of how your decision will permanently affect your retirement income, so you can plan accordingly.

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