For the past 22 years, national pollster Gallup has conducted an annual survey of retirees to gauge how reliant they are on their Social Security income. Between 80% and 90% of those polled have consistently noted their Social Security check is a "major" or "minor" source of income. In other words, it's a necessity to make ends meet.
Considering how important Social Security benefits have been for retirees for more than two decades, it's imperative that future generations of retired workers get as much as they can out of America's top retirement program. But in order for this to happen, future retirees first need to acquaint themselves with the factors that can influence their monthly Social Security benefit, as well as understand how claiming age is the biggest pendulum-swinging factor of them all.
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These are the four puzzle pieces used to calculate your Social Security benefit
While there's no denying that Social Security can, at times, be more complex than it needs to be -- e.g., depending on your provisional income, a percentage of your Social Security benefits can be taxed at the federal level, as well as in 10 states -- the puzzle pieces used by the Social Security Administration (SSA) to calculate your benefit are straightforward:
- Work history
- Earnings history
- Full retirement age
- Claiming age
The first two components are intertwined. The SSA will take your 35 highest-earning, inflation-adjusted years into account when calculating your retired-worker benefit. If you've been a high earner throughout your lifetime, there's a good chance you'll receive a larger benefit during retirement.
However, there's a caveat to the above: For every year fewer than 35 worked, the SSA will average $0 into your calculation. If you want to maximize what you'll receive from America's top retirement program, you'll want to work a minimum of 35 years.
The third factor of importance is your full retirement age, which the SSA occasionally refers to as "normal retirement age." It represents the age you can receive 100% of your retired-worker benefit and is entirely determined by your birth year. It's the only component that you have no control over.
The fourth "puzzle piece," and the one that can really determine if your Social Security payout is maximized on a monthly and/or lifetime basis, is your claiming age. While eligible workers have the option of taking their payout as early as age 62, there are ample rewards for being patient. Beginning at age 62 and continuing through age 69, retired-worker benefits can increase by as much as 8% per year, as shown 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 and 66?
Based on your birth year and the traditional claiming age range of 62 through 70, your claiming age can have huge implications on what you'll receive each month. Claiming benefits as early as possible if you're born in or after 1960 (i.e., most of today's workforce) can reduce your monthly benefit by as much as 30%. Comparatively, waiting until age 70 can increase your Social Security check by 24% to 32% above what you'd have taken home at full retirement age, depending on your birth year.
Despite every age in the traditional claiming age range offering its own unique advantages and drawbacks, ages 62 and 66 stand out as some of the most popular choices for retired workers.
The psychological reason an age 62 claim is so popular is that it allows retirees access to their benefit as soon as possible. Even though age 62 claimants are accepting a 25% to 30% permanent reduction to their payout (depending on their birth year), it allows them to receive their benefit while they're young enough to enjoy it.
The other reason age 62 has been a prominent claiming age has to do with the forecast from the Social Security Board of Trustees that the Old-Age and Survivors Insurance Trust Fund (OASI) will exhaust its asset reserves by 2033. If the OASI's excess cash built up since inception were to be depleted in nine years, benefit cuts of up to 23% may be needed for retired workers and survivor beneficiaries. Claiming at age 62 may be viewed by some retirees as a way to front-run any potential benefit cuts.
Meanwhile, age 66 has gained prominence as the midpoint of the traditional claiming age range. Waiting just four years, post-eligibility, to begin receiving your Social Security check can minimize the permanent monthly reduction for future retirees. Plus, at age 66, you're still presumably young enough to enjoy the payout.
A middle-ground claim like age 66 also makes sense, given that life expectancies have demonstrably increased since the first retired-worker check was mailed out in January 1940. All told, average life expectancy has risen by 13 years since 1940, which may incentivize retired workers to be patient.
Now that you have a clearer understanding of what might compel retirees to claim their payout at ages 62 and 66, let's look at the meat and potatoes and examine how much beneficiaries are bringing home each month at these respective ages. Take note that the following average benefits are based on the age of the recipient in December 2023 and don't necessarily indicate the age they began taking their payout. For instance, age 66 beneficiaries could choose to receive their payout from age 62 through age 66.
According to recently released data from the SSA's Office of the Actuary, just over 590,000 retired-worker beneficiaries were receiving $1,298.26 per month at age 62, as of December 2023. That compares to about 2.11 million aged 66 retired-worker beneficiaries who were taking home $1,739.92 per month. Put another way, age 62 claimants are receiving about 25% less per month than age 66 beneficiaries.
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Is there such a thing as a "best" claiming age?
This brings us to the all-important question: Which claiming age is best?
The concrete answer is that we don't know. In order to absolutely know which claiming age is going to maximize our lifetime benefit, we'd need to know the date of our "departure." Thankfully, this is something we don't know. But it also means our claiming decision will always involve some level of guesswork.
Despite this prevailing uncertainty, researchers at online financial planning company United Income released a report in 2019 that took a comprehensive look at the claiming decisions of 20,000 retired workers to determine if there are better claiming ages than others. Researchers used data from the University of Michigan's Health and Retirement Study to extrapolate their findings.
The primary takeaway from United Income's study is that retirees rarely optimized their claim. An "optimal" claim is one that generates the retired worker the highest possible lifetime income (note the emphasis I've made on "lifetime").
What's also noteworthy is that optimal and actual claims were near-perfect inverses of one another. Whereas most retired workers chose to begin receiving their payout prior to reaching full retirement age, the extrapolated findings showed that later claims would have overwhelmingly generated the highest lifetime income.
Interestingly, ages 62, 63, 64, and 65 (not in this order) were the four claiming ages with the lowest likelihood of maximizing lifetime benefits. On the other hand, a jaw-dropping 57% of beneficiaries would have, in hindsight, gotten the most out of Social Security with an age 70 claim. For what it's worth, age 66 trailed ages 70, 67, 69, and 68 (in this order) in the percentage of optimal claims.
Does this study conclusively mean that everyone should take their payout at age 70? No. There are going to be plenty of viable reasons to consider an earlier claim, such as if you're a lower-earning spouse and want to generate income for the household while your significant other's payout grows over time. Likewise, if you have one or more chronic health conditions that could shorten your life expectancy, an early claim can make total sense.
But what United Income's report does demonstrate is the power of patience. Even though everyone will rely on some combination of financial needs, marital status, and personal health when making their all-important Social Security claims decision, waiting is going to be a statistically smarter choice for a majority of future retirees.
