Social Security is a financial cornerstone for millions of retirees. After decades of paying into the system, many Americans rely on it as a guaranteed source of income in retirement.
But how much you receive depends on when you decide to claim your benefits—whether at 62, 67, or 70. Understanding how benefits change based on your age can help you plan better for retirement.
How Social Security Benefits Are Calculated
Your Social Security benefits are based on your highest-earning 35 years of work. The Social Security Administration (SSA) indexes those earnings to account for inflation, then calculates your Average Indexed Monthly Earnings (AIME).
From there, your Primary Insurance Amount (PIA)—the amount you receive at your full retirement age—is determined using a formula with bend points that adjust each year.
If you haven’t worked a full 35 years, zeros are added to your calculation, which lowers your AIME and ultimately reduces your monthly benefit. That’s why working a full 35 years can increase your Social Security payout.
What Happens to Benefits from Ages 62 to 70?
The age at which you claim Social Security has a significant impact on your monthly benefit. If you claim early, at age 62, your benefit is permanently reduced. On the other hand, if you delay benefits until age 70, your monthly payments will increase. Let’s break it down:
- Age 62: The earliest you can start collecting Social Security. However, your monthly PIA will be reduced by about 30%.
- Age 67: The full retirement age for most people born in 1960 or later. At this age, you receive your full PIA.
- Age 70: By delaying your benefits beyond your full retirement age, you earn an 8% increase for every year you wait, resulting in about a 24% boost to your monthly benefit if you delay until age 70.
Average Monthly Benefits at Each Age
Here’s a rough estimate of the average monthly Social Security benefit based on when you start claiming:
| Claiming Age | Average Monthly Benefit |
|---|---|
| Age 62 | $1,343 |
| Age 67 | $1,919 |
| Age 70 | $2,382 |
These figures are based on data from the Social Security Administration (SSA) and represent average benefits rounded to the nearest dollar.
Keep in mind that these numbers are subject to change due to annual Cost-of-Living Adjustments (COLA), which help benefits keep pace with inflation.
Is Social Security Enough to Retire On?
Whether Social Security alone can cover your retirement needs depends on various factors like where you live, your lifestyle, and personal expenses. In general, Social Security was never intended to be the sole source of retirement income.
It’s meant to supplement other income sources like savings, investments, and retirement accounts.
For example, someone retiring in Southern California with plans to travel may need significantly more income than someone living a more frugal lifestyle in a lower-cost area like North Carolina’s Outer Banks.
It’s important to consider these lifestyle factors when planning your retirement budget.
Social Security as Supplemental Income
While some people rely on Social Security as their primary source of income, it’s best to think of it as a supplement to other retirement savings. Ideally, retirees should have additional income streams, such as personal savings, 401(k) plans, and IRAs, to provide financial security and flexibility.
For those who haven’t been able to save as much, making the most of Social Security through strategic claiming and delaying benefits can be crucial.
Strategies to Maximize Your Social Security Benefits
1. Work for 35 Years
Since your Social Security benefits are based on your highest 35 earning years, working for at least that long ensures no zeros are factored into your benefit calculation. If you haven’t worked a full 35 years, consider delaying retirement to boost your AIME.
2. Delay Filing for Benefits
Waiting to claim Social Security past your full retirement age results in an 8% increase in your monthly benefit for every year you wait, up to age 70. If you can afford to delay and expect a long retirement, this can significantly increase your lifetime benefits.
3. Increase Your Earnings
Since benefits are tied to your income, boosting your earnings over your career can raise your Social Security payout. Consider career moves that increase your salary, such as promotions or switching jobs.
Understanding how your Social Security benefit changes depending on when you claim is essential for retirement planning. While many retirees depend on Social Security, it should ideally be part of a broader financial strategy that includes savings and investments.
Whether you claim at 62, 67, or 70, knowing how much you’ll receive can help ensure a more comfortable and secure retirement.
FAQs
What’s the average Social Security benefit at age 67?
The average monthly benefit at full retirement age (67) is about $1,919.
How much does Social Security increase if you wait until 70?
Waiting until 70 increases your monthly benefit by roughly 24%.
Is claiming Social Security at 62 a good idea?
Claiming at 62 reduces your monthly benefit by about 30%, so it depends on your financial situation.
How are Social Security benefits calculated?
Benefits are based on your highest 35 years of indexed earnings and are calculated using bend points.
Can I live solely on Social Security in retirement?
For most people, Social Security alone is not enough, and it’s best to have supplemental income sources.
