In March, more than 52 million retired workers brought home an average Social Security check of $1,997.13. While this is a relatively modest monthly sum, it’s proved vital to helping retirees make ends meet.
In each of the previous 23 years, pollster Gallup has surveyed retirees to determine how reliant they are on the Social Security income they receive. Consistently, between 80% and 90% of retired-worker beneficiaries lean on their payout, to some degree, to cover their expenses.
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In other words, getting as much income as possible from Social Security isn’t a luxury — for many, it’s foundational to their financial well-being.
But to maximize what you’ll receive, you’ll first need to understand the nuts and bolts of how your benefit is calculated and grasp just how important your claiming age can be to monthly and lifetime Social Security income collection. Collecting your payout early (at age 62), taking a middle-ground approach (age 67), or being patient (age 70) can make a huge difference in what you’ll receive.
Image source: Getty Images.
These four variables are used to calculate your monthly Social Security check
Although Social Security isn’t always the easiest government program to understand, the four variables used by the Social Security Administration (SSA) to calculate your monthly benefit are as straightforward as they come:
- Earnings history
- Work history
- Full retirement age
- Claiming age
The first two factors — your work and earnings history — are inseparable. The SSA takes into account your 35 highest-earning, inflation-adjusted years when calculating how much you’ll be paid on a monthly basis. Presumably, a higher average wage or salary throughout your lifetime (investment income doesn’t count) should translate into a larger Social Security retirement benefit.
But there’s a bit of a catch, as well. If you don’t have at least 35 qualifying years of work, you’ll have no chance to maximize what you’ll receive from the program, regardless of how much you earn in a given year. For every year less than 35 worked, a $0 is averaged into your calculation.
The third variable of importance is your full retirement age. This is the age at which you become eligible to receive 100% of your retirement benefit, determined entirely by the year you were born.
Last but certainly not least is your claiming age. Arguably, nothing has the potential to swing the payout pendulum more than the age you choose to begin receiving a Social Security benefit. While retired-worker benefits can begin as early as age 62, there’s a financial incentive to exercise patience. For every year a worker waits to claim their payout, beginning at age 62 and continuing until age 70, their benefit can grow by as much as 8%, as shown 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.
There are well-defined advantages and drawbacks to collecting your benefits at 62, 67, and 70
Despite the sizable variances in payout percentages displayed in the table, every age within the traditional initial collection range of 62 through 70 has its own unique advantages and drawbacks. This includes three claiming ages that should be particularly popular moving forward: 62, 67, and 70.
Let’s take a brief look at the respective pros and cons associated with these three ages.
Age 62
One of the prime reasons retired workers choose to take their payout at 62 is that they don’t want to wait. For retirees who aren’t working, an early claim can be too tempting to pass up.
Additionally, some retirees collect their payout early due to concerns about looming benefit cuts. According to the 2024 Social Security Board of Trustees Report, the Old-Age and Survivors Insurance Trust Fund (OASI) is slated to exhaust its asset reserves by 2033. If the OASI’s asset reserves are depleted, retired workers could face a 21% benefit cut in eight years. Collecting at 62 may be viewed as a way to front-run possible benefit reductions.
On the other hand, claiming as early as possible has its downsides. Your monthly payout will be permanently reduced by 25% to 30%, depending on your birth year, and the SSA may be able to withhold some or all of your payout (prior to you reaching your full retirement age) if you earn too much.
Age 67
The allure of the middle-ground approach is that a little patience can go a long way. Waiting five years to collect your retired-worker payout ensures you’ll receive, at minimum, 100% of what you’re due — and likely still be young enough to enjoy it.
For workers born in 1960 or later, age 67 represents their full retirement age. This is a psychologically important age that at least some retirees will aim for. The primary drawback to collecting your payout at 67 is that you’ll potentially leave a lot of Social Security income on the table if you live well into your 80s, or beyond.
Age 70
What makes an age 70 claim so intriguing for retirees is the ability to maximize their monthly benefit. Collecting at 70 increases your Social Security check by 24% to 32% (depending on your birth year) above and beyond what you would have received at full retirement age.
While collecting at 70 can pump up your monthly payout, the potential negative is that it offers no guarantee that you’ll live long enough to also maximize your lifetime income collection from Social Security.
Keeping these advantages and drawbacks in mind, the pivotal question must be: Is it better to collect Social Security at 62, 67, or 70? A detailed study published in 2019 offers a clear answer.
Image source: Getty Images.
There is a statistically superior Social Security claiming age
Six years ago, researchers at United Income published a report (The Retirement Solution Hiding in Plain Sight) that used data from the University of Michigan’s Health and Retirement Study to extrapolate the claiming decisions of 20,000 retired workers. United Income examined which claiming ages, if any, gave retirees the best chance to optimize their Social Security payout. In this instance, an “optimized” payout would be the claiming age that resulted in the highest possible lifetime income collection.
One of United Income’s initial findings wasn’t a surprise: Only 4% of the 20,000 retired workers studied had optimized their payout.
Without knowing the exact date we’re going to pass away, there’s no way to know whether we’ve made the best possible claiming decision. In short, there will always be some educated guesswork involved.
Furthermore, everyone’s path is unique. The combination of your financial needs, access to retirement accounts, tax implications, marital status, personal health, and so on will be different from every other retiree. This means there isn’t a one-size-fits-all blueprint when it comes to collecting benefits.
But there was another finding from United Income that did stand out. Specifically, researchers noted a clear inversion between actual and optimal claims.
For example, 79% of all retired-worker claims occurred at ages 62, 63, or 64. However, only 8% of claims in this initial collection range were deemed optimal by United Income.
On the opposite end of the spectrum, very few claims were made at 70. Yet, a whopping 57% of the 20,000 retired workers analyzed would have optimized their lifetime payout had they waited until 70 to begin receiving their benefit.
To be clear, this doesn’t mean every future retiree is incentivized to wait until age 70. For instance, people with one or more chronic health conditions whose lifespans could be shortened are more likely to maximize their lifetime Social Security income by claiming early. But when examining the bigger picture, age 70 looks to be a statistically superior collection age for a majority of future retirees.
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