When it comes to Social Security, deciding when to claim your benefits can significantly affect how much income you receive over your lifetime. Whether you’re already retired or just starting to plan for retirement, knowing how your claiming age impacts your Social Security payout is crucial for maximizing your benefits.
Social Security
For most retirees, Social Security plays a critical role in covering their living expenses. According to Gallup surveys, 80% to 90% of retirees rely on their Social Security benefits to help pay bills.
Even among non-retirees, 76% to 88% expect to depend on Social Security when they retire. Clearly, getting the most out of your Social Security income is vital to ensuring financial security in retirement.
Benefits
Your monthly Social Security benefit is calculated based on four key factors:
- Work history
- Earnings history
- Full retirement age
- Claiming age
Your work and earnings history go hand in hand. The Social Security Administration (SSA) uses your 35 highest-earning years, adjusted for inflation, to calculate your benefit. If you haven’t worked a full 35 years, zeros are factored in for the missing years, lowering your monthly payout.
Your full retirement age (FRA) is based on your birth year. For most people, it’s 67 years old. This is the age at which you can receive 100% of your Social Security benefit.
Lastly, claiming age is the one factor that can swing your monthly and lifetime payout the most. You can claim Social Security as early as age 62, but doing so reduces your benefit permanently. The longer you wait, up until age 70, the higher your monthly benefit will be.
Monthly Payout
Choosing when to claim Social Security is a major decision, as it directly impacts the size of your checks. If you claim early at age 62, your benefit will be reduced. However, if you delay past your full retirement age, your benefit increases each year up to age 70.
Here’s a look at how your monthly payout changes based on when you start claiming, depending on your birth year:
| Birth Year | Age 62 | Age 63 | Age 64 | Age 65 | Age 66 | Age 67 | Age 68 | Age 69 | Age 70 |
|---|---|---|---|---|---|---|---|---|---|
| 1960 or later | 70% | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% |
For example, if you were born in 1960 or later and claim Social Security at age 62, you’ll receive just 70% of your full benefit. Waiting until 67 means you get the full amount, and delaying until 70 increases your benefit by 24%.
Benefits
When deciding whether to claim at 62 or wait until 67, it’s essential to weigh the pros and cons.
- Claiming at 62: The biggest advantage of claiming at age 62 is that you can start receiving benefits right away. In 2022, 27.3% of new claimants began receiving their Social Security at age 62, making it the most popular age to start benefits. However, claiming early permanently reduces your benefit by up to 30%. For instance, in December 2023, the average monthly benefit for someone who claimed at 62 was $1,298.26.
- Claiming at 67: Waiting until full retirement age (67 for those born in 1960 or later) ensures you receive your full monthly benefit. Claimants in this age group averaged $1,883.50 in December 2023—about 45% more than those who claimed at age 62. Plus, if you wait until 67, you avoid the retirement earnings test, which reduces your benefit if you continue working and earn above a certain threshold.
While claiming at 67 maximizes your monthly benefit, the downside is that you miss out on years of payouts. If you live well into your 80s or beyond, the extra monthly income could add up to significant lifetime savings.
Claim
Finding the “best” age to claim Social Security depends on several factors, including your health, financial situation, and personal goals. A 2018 study by United Income examined the claiming ages of 20,000 retirees and found that only 4% had claimed at the optimal age to maximize their lifetime benefits. The study concluded that most retirees claim too early—79% of the participants claimed between ages 62 and 64, but only 8% of these claims were optimal.
Interestingly, the study revealed that for 57% of retirees, age 70 would have been the best age to claim benefits. Waiting until age 70 allows for the largest monthly checks, which can be especially beneficial if you live a long life.
However, it’s important to note that claiming early may be the right choice for individuals with health concerns or who need the income sooner. Ultimately, the best age to claim depends on your personal circumstances.
Deciding when to claim Social Security is one of the most important financial decisions you’ll make in retirement. Your claiming age can significantly impact your monthly and lifetime payouts, with those who wait until 67 or 70 seeing much larger benefits than early claimers. While there is no one-size-fits-all answer, knowing how claiming age affects your Social Security can help you make the best decision for your financial future.
FAQs
How much is Social Security reduced if claimed at 62?
Claiming at 62 results in a reduction of up to 30%, depending on your birth year.
What is full retirement age for most workers today?
For those born in 1960 or later, the full retirement age is 67.
Does delaying Social Security past 67 increase benefits?
Yes, delaying past 67 increases your benefits by 8% per year until age 70.
How much more can I receive by claiming at 67 instead of 62?
Claiming at 67 could give you about 45% more per month than claiming at 62.
Is there a best age to claim Social Security?
Statistically, waiting until age 70 maximizes lifetime benefits for most people.
