Think 65 Is the Best Age for Social Security? Here’s Why You Should Rethink That Plan
You might regret claiming benefits at age 65.
In 2022, the typical retiree claiming Social Security can expect a monthly benefit of $1,657 — $2,537 less than the maximum possible benefit of $4,194. The good news is that you can work toward a higher monthly paycheck by doing a few simple (though difficult) things in the years leading up to retirement.
Even if you’re unable to achieve the maximum possible benefit, there’s still quite a bit you can do to receive more in retirement.
1. Wait to file
The longer you wait to file for benefits, the more you’ll receive in monthly retirement checks. Waiting until age 70 to file is one of the factors — though not the only one — required to receive the full check of $4,194.
Being able to wait to file benefits is a privilege in and of itself, since many retirees claim benefits right at age 62 for any number of reasons: finances, health, and family are among the most common. If your life expectancy is below average, waiting to age 70 to claim retirement benefits may not be an option.
Similarly, if withdrawals from your personal savings won’t cover retirement costs, taking Social Security at 62 could be a necessity. If you’re able to wait to file for benefits — even a year or two — you’ll be happy to know that your checks will be higher than if you file as soon as you’re eligible.
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2. Earn more
To receive the maximum monthly Social Security benefit, you’ll also need to earn the maximum taxable wage base across the bulk of your working career. In 2022, the maximum wage base for Social Security is $147,000, though it hasn’t always been that high — from 1937 to 1950, the wage base was a mere $3,000.
This means you’ll need to earn a fair amount of money over the course of your working career and do so with great consistency. Every year, only about 6% of earners clear the maximum wage-base hurdle, and an even smaller number have done it over the course of a multidecade career.
Still, earning more will help increase your monthly benefit check — even if you don’t hit the maximum. This includes income from side hustles and freelance income, so you don’t necessarily have to earn a salary greater than the maximum taxable wage base. But you will need to declare the extra income on your tax return and pay self-employment tax for it to count toward future Social Security benefits.
3. Work longer
To receive the maximum monthly check, not only will you have to earn a certain amount of money over the course of your career — and pay the Social Security tax due — you’ll also need to have done it for at least 35 years.
Social Security benefits are calculated on your highest-earning 35 years of work, which means any time you took off (for any reason) will weigh down your benefit calculation. Replacing “zero income” years with higher-earning years will ultimately increase the amount you receive upon filing for benefits.
Whether working longer is worth it is, of course, a personal decision. But it’s good to know that the more income-earning years you have, the more you’ll be closer to the maximum Social Security benefit when it comes time to file for benefits.
How to earn the maximum
Earning the maximum Social Security benefit may sound simple, but it’s actually quite difficult in practice. You’ll need to earn the maximum taxable wage base, do it for at least 35 years, and wait until age 70 to finally claim benefits. This means you’ll have to work extremely hard for a very long time, and have the good fortune to be able to wait nearly an extra decade to file for benefits.
Being able to cash maximum Social Security checks in retirement is an enviable feat. But if you don’t end up meeting the requirements for the max, you can still get close by earning more, working longer, and delaying your claim for benefits. Regardless of your ultimate outcome, be sure you’re aware of how the system works and how to receive more to cover costs in retirement.
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