As Americans continue to grapple with rising living costs, choosing the right time to claim Social Security benefits has never been more important.
Social Security retirement benefits are calculated based on how long you worked, how much you made and when you started collecting. Those who claim at the earliest retirement age, 62, receive a reduced monthly payment, while those who wait until 70 see a bump.
Data from the Social Security Administration shows most people claim benefits before their full retirement age but experts say that decision depends on several factors like a person’s health, financial situation, and marital status.
“There is no perfect age, it is very specific to each individual, couple and family,” said Martha Shedden, president and co-founder of the National Association of Registered Social Security Analysts.
When can I receive my full retirement benefit?
To receive 100% of the benefit you’re entitled to, you’ll have to wait until your full retirement age. That age varies depending on the year you were born.
For those born before 1954, the full retirement age is 66, then gradually rises for people born between 1955 and 1960. Anyone born in 1960 or later can receive their full benefits at 67.
How much Social Security will I get if I claim early?
You can start collecting Social Security benefit as early as 62, but that comes at a price. Those who claim before their full retirement age have their monthly benefits permanently reduced based on how early they retire.
For example, let’s say a person’s full retirement age is 67. They can start receiving benefits at 62 — five years early — but they would see their monthly check lowered by roughly 30%. That means a $1,000 benefit would be cut to $700.
Spousal benefits also get reduced when a person claims Social Security early.
According to data from the Social Security Administration, the average monthly retirement benefit for 62-year-olds was $1,275 in December 2022. By comparison, 67-year-old retirees received $1,844 per month on average, nearly $7,000 a year more.
You can use the Social Security Administration’s calculator to get a general idea of your monthly payments based on your age and earnings.
What if I delay taking my Social Security benefits?
Those who wait until after their full retirement age to start collecting benefits receive a boost based on how long they delay. The increase is called a delayed retirement credit and amounts to an 8% bump each year a person waits to claim between full retirement age and 70.
For example, someone eligible for full retirement at 67 would receive an 8% bump every year they wait to collect until they turn 70. That means you can earn up to 124% of your full benefit by waiting until you’re 70.
A 70-year-old retiring this year can receive a maximum of $4,873 a month, while someone at their full retirement age can collect a maximum of $3,822 monthly. That works out to over $12,600 more annually.
The average monthly retirement benefit for 70-year-olds was $1,963 in December 2022.
What does research say about the best age to claim Social Security?
Research suggests it’s generally better to wait to collect benefits, even though most Americans continue to claim early at 62.
A 2019 study commissioned by United Income estimated that older Americans lose a total of
$3.4 trillion in potential income because of early claiming. That works out to a lifetime loss of $111,000 per household.
The analysis found only 4% of retirees make the “financially optimal decision” to claim at 70 and about 57% of retirees would build more wealth if they waited until then.
The report concluded that “nearly no retirees are making the financially optimal decision about Social Security” and estimated that elderly poverty could be cut by 50% if all retirees claimed retirement benefits at the ideal time.
What factors should you consider when taking Social Security?
While it’s typically better to wait if you can afford it, the best age to start collecting varies from person to person and depends on several variables like health, marital status and other retirement savings.
When it makes sense to claim early at 62
For those who need the money as soon as possible, collecting retirement benefits early may be the way to go.
“It is often the best choice for someone to start at 62, especially if they’re no longer able to work and they have no other financial resources,” Shedden said.
Taking reduced monthly payments early could also make sense for someone who doesn’t expect to live to their full retirement age. Married couples with an age gap and minor children might also consider collecting as soon as possible due to spousal benefits.
Those who are still working are better off waiting due to Social Security’s “earnings limit,” which further reduces benefits if you make over a certain amount.
When it makes sense to delay until 70
Those who want to keep working and can afford to wait are often better off delaying their benefits.
By waiting, you earn additional benefits for yourself but also provide more support to anyone claiming retirement or survivors benefits based on your career, like a spouse or minor child.
“For couples, it’s very important to have at least the higher earner weight until 70 to claim, if possible,” Shedden said.
She added that it’s also important for people to consider “longevity risk,” the possibility that they’ll outlive their money.
“We encourage our clients to use their maximum age of life, because they might not die as early as they think they’re going to,” she said.
Can I change my mind about claiming Social Security benefits?
You can cancel or withdraw your Social Security application up to 12 months after getting approved if you change your mind and decide you’d rather wait.
If you cancel after you begin receiving benefits, then you have to pay the money back. However, you won’t pay interest and you won’t be permanently locked in at whatever reduced benefit you were previously set to collect.
Those who have reached their full retirement age can also suspend their benefits and earn delayed retirement credits for each month their benefits are paused. At 70, the Social Security Administration will restart your payouts at the higher amount. You can also choose to reinstate payments earlier if you prefer.
