For most Americans, Social Security income helps forge their financial foundation. The Center for Budget and Policy Priorities estimates 16.3 million adults aged 65 and over were pulled above the federal poverty line in 2023 because of their monthly Social Security check. Meanwhile, between 80% and 90% of annually surveyed retirees by Gallup note their Social Security income is a necessity, in some capacity, to cover their expenses.
These statistics firmly suggest that getting as much as possible out of Social Security isn’t a luxury for future generations of retirees — it’s going to be a necessity. However, optimizing what you’ll receive in lifetime Social Security income isn’t easy. To do so, you’ll need to understand the ins and outs of how your benefit is calculated, as well as fully comprehend just how important your claiming age can be.
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Collecting early (age 62), taking a middle-ground approach (age 66), or being very patient (age 70) can swing the payout pendulum wildly, depending on your unique circumstances.
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These four variables are used to calculate your monthly Social Security check
Although some aspects of Social Security can be confusing, the parameters used to calculate your monthly Social Security benefit are straightforward. In no particular order, these four variables are your:
- Work history
- Earnings history
- Full retirement age
- Claiming age
Your work and earnings history are intricately linked. The Social Security Administration (SSA) uses your 35 highest-earning, inflation-adjusted years to calculate your monthly payout. This means a higher wage or salary throughout your lifetime can result in a notably beefier monthly benefit during retirement.
There is, however, a caveat to this calculation if you fail to work at least 35 years. For every year less of 35 in the labor force, the SSA averages in $0. Regardless of how much you made annually, you’ll have no opportunity to maximize what you’ll receive from America’s leading social program without at least 35 years of qualified work history.
The third factor — your full retirement age — is the only one you have no control over. It’s entirely determined by your birth year, and it represents the age where you can collect 100% of your retired-worker benefit.
The fourth variable is your claiming age, which is arguably the most important of all. Even though retired workers have the option of collecting their benefit as early as age 62, there’s a financial incentive to be patient. For every year a worker waits to collect their monthly check, beginning at age 62 and continuing until age 70, their payout can grow by as much as 8%.
You can see a more detailed breakdown of this dynamic in the table.
| 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.
Clear pros and cons exist with collecting benefits at ages 62, 66, and 70
Despite this wide variance in monthly benefits, every age within the traditional claiming range (62 through 70) offers unique advantages and drawbacks. What follows are some of the pros and cons associated with early (62), middle-ground (66), and late (70) collection.
Age 62
The natural lure of collecting at 62 is not having to wait to get your hands on your benefits. This can be an especially popular choice for seniors without an income stream or those attempting to pay down debt.
Additionally, the Social Security Board of Trustees has cautioned that the Old-Age and Survivors Insurance Trust Fund (OASI) may exhaust its asset reserves by 2033. While the OASI is in no danger of bankruptcy or insolvency, it’s possible retired workers could see their benefits cut by 21% in eight years. Claiming early may be viewed as a way to collect as much Social Security income as possible before cuts go into effect.
On the other hand, claiming at 62 ensures a permanent monthly payout reduction of 25% to 30%, depending on your birth year. It can also expose you to various early-filer penalties, such as the retirement earnings test. If you earn too much while collecting a Social Security check before reaching full retirement age, the SSA can withhold some or all of your benefit.
Age 66
The beautiful thing about the middle-ground approach is that it significantly reduces the permanent monthly payout reduction in exchange for just a four-year wait. In short, you’ll still be young enough to enjoy the extra income you’ll receive.
This is also a psychologically important claiming age. It represents the literal middle ground of the traditional claiming range of 62 through 70, and is the full retirement age for workers born from 1943 to 1954.
The potential downside of collecting at 66 is that you risk leaving a substantial amount of Social Security income on the table if you live well into your 80s or beyond.
Age 70
The attraction of an age 70 claim is that you’ll maximize what you’ll receive on a monthly basis. Depending on your birth year, you’ll receive 24% to 32% more per month than you’d have been entitled to at your full retirement age. Waiting eight years post-eligibility is the way to go if you want the highest possible monthly payout.
However, there’s no guarantee you’ll live long enough to also maximize what you’ll receive over your lifetime.
With a better understanding of the advantages and drawbacks of these claiming ages, the all-important question has to be: Is it better to collect Social Security at 62, 66, or 70?
An extensive analysis published six years ago offers a very big clue that may answer this question for many future retirees.
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Statistically speaking, there is a superior claiming age
In 2019, United Income released an analysis (The Retirement Solution Hiding in Plain Sight) that used data from the University of Michigan’s Health and Retirement Study to extrapolate the Social Security claiming decisions of 20,000 retired workers. Researchers aimed to determine which, if any, initial collection ages gave retirees the greatest probability of optimizing their payout. In this sense, an “optimized” claiming decision is one that maximizes lifetime income collected.
It’s probably no surprise that very few (4%) of the retired workers studied had made an optimal choice. Without knowing our “departure date” in advance, there’s always going to be some degree of educated guesswork and luck involved when deciding which age is best to begin receiving Social Security.
Furthermore, each of us takes our own unique path in life. This means our “formula,” which can include access to retirement accounts and savings, tax implications, marital status, personal health, and so on, will be different from everyone else. There simply isn’t a one-size-fits-all blueprint that works when it comes to claiming Social Security benefits.
But what really stands out about United Income’s analysis is the marked disparity between actual and optimal claims.
For example, a combined 79% of the 20,000 retired workers initially took their payout at 62, 63, or 64. However, United Income’s extrapolation showed that only a cumulative 8% of claimants from 62 through 64 would have optimized their lifetime benefit collection.
On the flip side, while very few of the 20,000 retired workers studied waited until age 70 to begin collecting their monthly Social Security check, a whopping 57% of claimants would have maximized their lifetime income at this age. For those curious, age 66 was also the middle ground of lifetime optimization probability — ahead of ages 62 through 65 (not in this order), and behind 67 through 70 (also not in this order).
To be up front, this study doesn’t negate the appeal of an early filing. For instance, someone with one or more chronic health conditions, who may not reach the average U.S. life expectancy, can benefit from collecting their payout well before reaching their full retirement age.
But what this extensive analysis does offer is a very big statistical clue that patience should pay off handsomely, more often than not, for future generations of retirees.
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