Many Americans don't wait much longer than they have to before they start collecting Social Security retirement benefits.
Most people first become eligible for benefits at age 62, and claiming as soon as possible often means they can start their retirement sooner. Social Security is an important source of income in retirement for the majority of older Americans, according to an annual Gallup poll. Without it, retirees may not have enough to make ends meet.
But claiming at age 62 often results in less Social Security income over the long run. What's more, many retirees may find their Social Security benefit at age 62 isn't quite as much as they need to live on. As such, it might be worth it to wait a few years before claiming Social Security benefits.
Understanding how the Social Security Administration calculates your monthly benefit can provide a better understanding of how claiming as soon as possible can impact your retirement budget. And that impact shows up in the numbers of the average Social Security benefit at age 62 versus the average retiree.
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How the government calculates your Social Security benefits
Three primary factors go into determining how much you receive in Social Security every month:
- Your earnings record
- Your full retirement age
- Your claiming age
The first step the Social Security Administration takes to determine your monthly benefit is to adjust every year of your earned income for inflation. It then takes your 35 highest-earning years and finds the average. If you didn't work for at least 35 years, it fills in those missing years with $0 in earned income. Once it's calculated your average monthly earnings, it plugs that number into the Social Security benefits formula to determine your primary insurance amount, or PIA.
Your PIA is the amount you'll receive if you claim Social Security in the month you reach your full retirement age. For those born in 1954 or earlier, your full retirement age was 66. But full retirement age increases by 2 months for every year you were born after 1954 until reaching age 67 for those born in 1960 or later.
The final factor impacting your monthly benefit comes down to when you claim. As mentioned, you can claim your retirement benefits starting at age 62. But claiming before you reach your full retirement age results in a reduction from your PIA. If you delay beyond your full retirement age, you'll receive a delayed retirement credit for each month you wait up until age 70. Here's what that looks like for someone with a full retirement age of 67.
| Claiming Age | % of PIA Received |
|---|---|
| 62 | 70% |
| 63 | 75% |
| 64 | 80% |
| 65 | 86.67% |
| 66 | 93.33% |
| 67 | 100% |
| 68 | 108% |
| 69 | 116% |
| 70 | 124% |
Data source: Social Security Administration. Calculations by Author.
Here's the average Social Security benefit at age 62
Sixty-two is the most popular age to claim retirement benefits. Roughly 27% of new retirement benefits applicants were between 62 and 63 years old when they filed in 2022, according to the most recent data from the Social Security Administration.
The 565,887 retired workers who were 62 years old and receiving Social Security benefits in December 2022 received an average of $1,274.87 that month. That adds up to about $15,298 per year. By comparison, the average Social Security benefit for all retirees that month was $1,825.14 ($21,902 per year). So, claiming at 62 results in a substantial cut in benefits.
That said, there are several good reasons to claim benefits as early as age 62. One is if you have a medical condition that results in a shorter life expectancy than your peers. While CDC data says the average 62-year-old should wait until age 70 to maximize their lifetime Social Security benefits based on life expectancy, it doesn't make sense if you might not even make it to 70 in the first place.
Another good reason to claim early is because you simply need the money. If you were forced into retirement due to circumstances outside of your control, you might not have saved enough to live on. And while you might keep looking for work, claiming Social Security at age 62 can be a lifeline. Importantly, there are ways to undo your decision or mitigate the impact of claiming early if you end up going back to work.
Most people should try to wait as long as possible before claiming Social Security
Several studies and the CDC's life expectancy data point to age 70 as the optimal age for the average retiree to claim Social Security. Nonetheless, it remains one of the least popular ages to claim benefits with less than 10% of retirees claiming at 70 or later.
But if you can wait a few years to retire, build up plenty of retirement savings in the meantime, and position yourself to claim benefits at age 70 instead of age 62, you'll end up much wealthier in retirement, on average. A 2019 study from United Income found 57% of retirees would maximize their chances of affording retirement by waiting until age 70.
On the other hand, just 8% of retirees would optimize their finances by claiming before age 65. The problem is, it's really hard to know if you belong to that 8%. If you have no reason to expect you're much different than average, stick to delaying your benefits as long as possible.
