Regardless of whether you're retired or just entering the labor force, there's a high likelihood that Social Security income will be needed, in some capacity, to help cover your expenses in your golden years.
For more than two decades, national pollster Gallup has been surveying retirees and non-retirees to assess their current or expected reliance on Social Security as an income source during retirement. Between 80% and 90% of current retirees count on their monthly checks to some degree to make ends meet. Meanwhile, between 76% and 88% of non-retirees believe they'll need their Social Security payout in some capacity when they hang up their proverbial work coat for good.
In other words, getting as much as possible out of Social Security isn't just a daydream for most Americans -- it's a necessity, given the current and expected reliance on income from this program.
Image source: Getty Images.
But to get as much as possible out of Social Security, future retirees first need to understand the ins and outs of how their benefits are calculated. This includes getting a feel for how important claiming age can be in determining whether an early (age 62), middle-of-the-road (age 66), or patient (age 70) claims approach makes the most sense.
These four puzzle pieces are used to calculate your monthly Social Security check
Though there are aspects of America's top retirement program that can be complicated or difficult to understand, the four puzzle pieces used by the Social Security Administration (SSA) to calculate your monthly check are straightforward:
- Work history
- Earnings history
- Full retirement age
- Claiming age
The first of these two variables -- your work and earnings histories -- are intertwined. The SSA will use your 35 highest-earning, inflation-adjusted years when calculating your monthly payout. In theory, this means you'll have a chance to receive a larger monthly benefit during retirement if you earn more, on average, during your lifetime.
But there's a bit of a catch to this calculation. For every year fewer than 35 worked, the SSA will penalize you by averaging in a $0. Working fewer than 35 years makes it impossible to maximize what you'll receive from Social Security.
The third item on the list, full retirement age, represents the age you become eligible to receive 100% of your retired-worker benefit. Since your full retirement age is determined by your birth year, it's the only puzzle piece that we have absolutely no control over.
Your claiming age is the fourth and arguably most important factor in determining how much you'll be paid each month from Social Security. While eligible workers can begin collecting benefits as early as age 62, the program dangles a monetary carrot to incentivize patience. For every year a worker waits to collect their payout, beginning at age 62 and continuing until age 70, their benefit can increase by as much as 8%. You can see the power of patience in action in the table below.
| 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, 66, and 70?
Despite this wide variance in payout percentages, every age within the traditional claiming range (62 through 70) has its own unique advantages and drawbacks. But within this range, ages 62, 66, and 70 are liable to be among the most popular for initial collection purposes moving forward.
Let's take a brief look at what might drive retired workers to claim their payouts at these three respective ages and then dive into the all-important question: What's the average Social Security benefit for ages 62, 66, and 70?
Age 62: According to Social Security's 2023 Annual Statistical Supplement, the earliest possible claiming age (62) was the most popular in 2022. The logical reason 27.3% of new claimants chose to begin collecting their benefits at 62 is because they didn't want to wait to get their hands on their payout.
Additionally, the 2024 Social Security Board of Trustees Report estimates that the Old-Age and Survivors Insurance Trust Fund (OASI), which doles out benefits to retired workers and survivor beneficiaries, will exhaust its asset reserves by 2033. If the OASI's asset reserves are completely exhausted, sweeping benefit cuts of up to 21% may be necessary to sustain payouts through 2098. Collecting benefits as early as possible might be viewed as a way to partially front-run payout reductions.
Age 66: Social Security's true middle ground was the second-most-popular claiming age in 2022 (24.7% of new claimants, excluding disability conversions). By patiently waiting four years post initial eligibility, retired-worker beneficiaries can minimize the permanent reduction to their monthly Social Security checks, compared to taking their payout at age 62.
It's also worth noting that 66 was the full retirement age for anyone born from 1943 through 1954. Psychologically, this has represented an important line in the sand for retired workers.
Age 70: The lure of an age 70 claim is that retired-worker beneficiaries will be maximizing what they receive on a monthly basis. Waiting eight years post-initial eligibility can increase a retired worker's payout by 24% to 32% above what they would have received at their full retirement age, depending on their birth year.
But it's one thing to talk about percentages and a whole new ballgame to discuss what these percentages might mean in terms of dollars.
Earlier this year, the SSA's Office of the Actuary released a data set compiling the average Social Security retired-worker benefit for every age as of December 2023. Keep in mind that with the exception of age 62, this data isn't necessarily indicative of when workers began collecting their payouts. Rather, it's simply stating what the average benefit is for retired workers of a specific age.
As of December 2023, roughly 590,400 retired-worker beneficiaries aged 62 were bringing home $1,298.26. By comparison, around 2.11 million aged 66 retired workers received an average check of $1,739.92. Finally, the 3.01 million retired-worker beneficiaries who were 70 years old in December 2023 received an average check of $2,037.54, which is 57% higher than the average retired worker received at age 62.
But does this mean waiting is the best course of action for future Social Security claimants? For that answer, I'll turn to a comprehensive study that directly addresses the complicated claiming-age debate.
Image source: Getty Images.
Statistically speaking, there is a superior claiming age
Let me preface this discussion by admitting there isn't a one-size-fits-all answer as to when Social Security benefits should be claimed. Everyone walks their own path, which means the variables that matter to them, including financial needs, access to retirement accounts, tax implications, marital status, personal health, and so on, are going to be unique and will need to be considered on a case-by-case basis.
Furthermore, we lack a critical piece of information when making our Social Security claims decision: our "expiration" date. Without knowing when we'll "depart," there's never any guarantee ahead of time that we've made the best possible choice.
With these limitations in mind, using the University of Michigan's Health and Retirement Study, the researchers at United Income released a report ("The Retirement Solution Hiding in Plain Sight") five years ago that extrapolated the claims of 20,000 retired workers. Their goal was to determine how many of these retirees made an "optimal" choice -- in other words, one that maximized their lifetime income from Social Security.
Given the long list of unique variables that can make optimizing Social Security benefits challenging, it's not a surprise that United Income found that only 4% of the 20,000 claimants studied had optimized their lifetime payout.
What's far more noteworthy is the inverse relationship between actual and optimal claims. For instance, 79% of the 20,000 retired workers examined began collecting their payouts from ages 62 through 64. However, only 8% of all claims were determined to be optimal over these three years. This means an age 62 claim is likely hurting, not helping, most retired workers.
On the other end of the spectrum, United Income found that waiting until age 70 to begin collecting benefits would have optimized the lifetime payouts of a whopping 57% of the workers studied. In order, the five ages likeliest to have optimized lifetime Social Security benefits were 70, 67, 69, 68, and 66.
To be clear, there are still scenarios where a claim at age 62 or 66 makes perfect sense. For example, if you have one or more chronic illnesses that are likely to shorten your lifespan, claiming benefits earlier, even with a permanent reduction to your monthly payout, can make mathematical sense.
But when taking a step back and examining a broad scope of Social Security claiming ages, 70 is, statistically speaking, superior to all others.
