Choosing when to begin receiving Social Security benefits is one of the most important financial decisions retirees face.
While many people opt to start collecting at the earliest possible age (62), data shows that waiting, particularly until age 70, can lead to significantly larger lifetime payouts. According to several recent studies and government statistics, patience may be the most rewarding strategy when it comes to maximizing retirement income.
The Social Security Administration allows eligible Americans to begin claiming retirement benefits as early as age 62. However, doing so comes with a permanent reduction in monthly payments-up to 30 percent less than what would be received at full retirement age (FRA), which is 66 or 67 depending on birth year.
Despite this, about 25 percent of Americans still file at 62. Common reasons include job loss, inadequate savings, or concerns about declining health.
Longevity, value, and break-even points
According to a detailed study published by The Motley Fool, approximately 92 percent of people aged 45 to 62 would increase their total lifetime benefits by waiting to claim Social Security – at least until 65, and preferably until age 70. The data reveals that claiming benefits at 70 instead of 62 can raise lifetime payouts by over 10 percent for the average worker, and up to 27.4 percent for those in lower-income brackets.
In terms of monthly income, waiting until after FRA can result in an 8 percent increase per year in benefits up until age 70. This means someone who waits until 70 may receive payments that are roughly 24 percent higher than what they would receive at 62.
For men who live until about 83.6 years, the national average, the difference in lifetime income is significant. Data shows a 62-year-old man who waits until 70 could receive $404,736 in lifetime benefits compared to $362,880 if he started at 62. For women, who tend to live longer, that total could be as high as $491,040, compared to $411,600 when starting early.
