Your claiming age can shift the Social Security payout scale more than any other factor.
For more than eight decades, Social Security has been doling out a monthly benefit to retired workers. While this payout isn’t making any of the program’s beneficiaries rich, it has proved to be a necessity, more often than not, for retirees.
In each of the last 23 years, Gallup has conducted a survey to gauge how reliant retired workers are on the income they receive from Social Security. These polls have found that 80% to 90% of retirees lean on their monthly check, in some capacity, to cover their expenses.
A separate analysis from the Center on Budget and Policy Priorities found that the poverty rate for adults aged 65 and above would be nearly four times higher if Social Security didn’t exist — 10.2% (as of 2022) with Social Security versus an estimated 38.7% without.
Therefore, getting as much as possible out of Social Security is vital to the financial well-being of most future retirees.
Image source: Getty Images.
But in order to maximize what you’ll receive from Social Security, you’ll first need to understand how your benefit is calculated. Only then can you realize how important your claiming age is, and what impact an early (age 62), middle-ground (age 67), or late (age 70) collection approach can have on your monthly benefit.
These four components are used to calculate your monthly Social Security check
Although Social Security sometimes has surprises in store for its recipients — did you know Social Security benefits can be taxable at the federal level, as well as in nine states? — the four factors used by the Social Security Administration (SSA) to calculate your monthly check are straightforward:
- Work history
- Earnings history
- Full retirement age
- Claiming age
Your work and earnings history are two components that are intertwined. The SSA will take into account your 35 highest-earning, inflation-adjusted years when calculating your monthly benefit. If you earn a higher average wage or salary throughout your lifetime (investment income doesn’t count), you’re more likely to receive a beefier monthly benefit during retirement.
But regardless of how much you earn each year, you’ll be penalized if you don’t have at least 35 years of work history. For every year less of 35 worked, the SSA will average a $0 into your calculation. If you believe you’ll need your Social Security check to make ends meet during retirement, you’ll want to work at least 35 years.
The third variable, your full retirement age, is determined by the year you’re born. It represents the age you become eligible to receive 100% of your retired-worker benefit, and it’s the only component we can’t control.
Last, but certainly not least, your claiming age can wildly swing the monthly (and lifetime) payout pendulum. Even though retired-worker benefits can begin as early as age 62, there’s a financial incentive that encourages patience. More specifically, for every year a worker waits to collect their benefit, beginning at age 62 and continuing until age 70, their payout can grow by up to 8%. You can see how this plays out, depending on your full retirement age, in the table.
| Birth Year | Age 62 | Age 63 | Age 64 | Age 65 | Age 66 | Age 67 | Age 68 | Age 69 | Age 70 |
| 1943-1954 | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% | 132% |
| 1955 | 74.2% | 79.2% | 85.6% | 92.2% | 98.9% | 106.7% | 114.7% | 122.7% | 130.7% |
| 1956 | 73.3% | 78.3% | 84.4% | 91.1% | 97.8% | 105.3% | 113.3% | 121.3% | 129.3% |
| 1957 | 72.5% | 77.5% | 83.3% | 90% | 96.7% | 104% | 112% | 120% | 128% |
| 1958 | 71.7% | 76.7% | 82.2% | 88.9% | 95.6% | 102.7% | 110.7% | 118.7% | 126.7% |
| 1959 | 70.8% | 75.8% | 81.1% | 87.8% | 94.4% | 101.3% | 109.3% | 117.3% | 125.3% |
| 1960 or later | 70% | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% |
Data source: Social Security Administration.
What’s the average Social Security benefit at ages 62, 67, and 70?
Although every age within the traditional collection range of 62 through 70 has its own unique advantages and drawbacks, three claiming ages are likely to be especially popular moving forward: 62, 67, and 70.
Let’s briefly dig into the pros and cons of these three claiming ages and take a closer look at what the average beneficiary is respectively taking home each month at 62, 67, and 70.
- Why collect at age 62? The lure of claiming benefits at age 62 is not having to wait to get your hands on your benefit. There’s also the possibility of sweeping Social Security benefit cuts by 2033. Taking your payout as soon as possible may be viewed as a way to front-run any possible reduction.
On the other hand, your payout is permanently reduced by 25% to 30% when collecting at age 62 (depending on your birth year). Additionally, you may be exposed to other early-filer penalties, such as the retirement earnings test, which allows the SSA to withhold some or all of your benefits, depending on your income.
- Why collect at age 67? This could quickly become the most-popular of all claiming ages, given that age 67 is the full retirement age for anyone born in or after 1960 (i.e., most of today’s workforce). Initially collecting at 67 means no reduction to your monthly payout. The downside to claiming at 67 is that if you live well into your 80s (or beyond), you’ll have, in hindsight, left a lot of Social Security income on the table.
- Why collect at age 70? The advantage of an age 70 claim is that you’re guaranteed to maximize your monthly benefit, which will be between 24% and 32% more than what you would have received at your full retirement age (depending on your birth year). On the flip side, there’s no guarantee you’ll live long enough to also maximize your lifetime payout from Social Security.
With a better understanding of the positives and drawbacks of these three claiming ages, let’s examine what the average Social Security benefit is at 62, 67, and 70.
Every year, the SSA’s Office of the Actuary releases a breakdown detailing the average monthly benefit of retired-worker beneficiaries between ages 62 and 99-plus. Keep in mind this data is based on the age of retired workers, as of December 2023, and isn’t necessarily indicative of the age they began collecting their benefit, except for age 62.
With this being said, in the neighborhood of 590,000 aged 62 retired-worker beneficiaries brought home an average check of $1,298.26 in December 2023. By comparison, nearly 2.92 million retirees took home an average payout of $1,883.50 at age 67. Lastly, around 3.01 million retired-worker beneficiaries pocketed an average benefit of $2,037.54 at age 70.
From one end of the traditional claiming spectrum to the other, age 70 beneficiaries received, on average, 57% more than the earliest filers.
Image source: Getty Images.
Statistically speaking, there is a superior claiming age for most retirees
Based on this wide variance in monthly payouts, you might be wondering if one or more ages within the traditional collection range gives future retirees a better chance of maximizing what they’ll receive from Social Security. According to a comprehensive statistical analysis, there is.
In 2019, researchers at United Income released a study, The Retirement Solution Hiding in Plain Sight, which extrapolated the claiming decisions of 20,000 retired workers using data from the University of Michigan’s Health and Retirement Study. The goal was to see which, if any, ages were responsible for optimizing Social Security benefits. In this sense, an “optimal” payout is once that maximizes lifetime (key word!) income collection.
As you might expect, this extensive analysis found that just 4% of the 20,000 retired workers studied had made an optimal claim. Since we don’t know our “expiration date” ahead of time, there’s always going to be some degree of guesswork involved when making our claiming decision.
To add, we all have our own unique path we walk toward retirement. Everyone’s combination of financial needs, accessible retirement accounts, marital status, tax implications, personal health, and so on, will differ. Without a one-size-fits-all blueprint, it will lead to some variability in claiming choice.
However, the more important find is the nearly perfect inversion between actual and optimal claims. Although 79% of the 20,000 retired workers began receiving their benefit from ages 62 through 64, only 8% of claims made in this range ultimately proved optimal.
On the other hand, while only a small percentage of retired workers waited until age 70 to begin receiving their Social Security benefit, this would have been optimal for an astounding 57% of the 20,000 retired workers analyzed.
To be fair, this doesn’t mean all future retirees should wait until age 70 to begin collecting their payout. For instance, people with one or more chronic health conditions that can shorten their lifespan may have very good reason for collecting at an earlier age.
But based on this extensive statistical analysis, patience is likely to pay off handsomely for a majority of future retirees. It’s something to keep in mind if you expect to rely on Social Security, in any capacity, to make ends meet during retirement.
