Key Points
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Your Social Security benefit is based on your work history.
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You get benefits equal to your average wage over 35 years.
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There’s another factor that can have a profound impact on your check.
The Social Security benefits formula bases your benefits on average wages earned during the course of your career. Specifically, you get benefits based on a percentage of your highest 35 years of earnings after adjusting for inflation.
Given that the benefits formula is based on how much money you make, you might assume that two retirees with the same work history would have the same benefits. But that’s not necessarily true. One person could receive over $1,000 more than the other in certain circumstances.
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That’s because another factor makes a major impact on how much your Social Security benefits add up to.
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Why your work history isn’t the only big factor in determining benefits
Let’s say that we have two workers who have the same work history. Both worked the same number of years and earned the same income, which was about average throughout their working life. But one ends up with a monthly benefit of $1,400 and the other with a monthly benefit of $2,480.
While this might seem odd, the reason is simple. It all comes down to the age when they claimed their Social Security benefits.
The average benefit in 2026 is $2,071, so let’s say that both workers would have a $2,000 standard monthly benefit at their full retirement age of 67 to keep things simple. If the first worker stopped working and claimed at 62, they’d be hit with early filing penalties that reduce their benefit by 30%. This would leave them with $1,400.
If the second worker also stopped working at 62 but lived off their 401(k) for a while and waited to claim benefits at 70, they’d increase their check by 24% thanks to delayed retirement credits. This would leave the second worker with $2,480 per month in benefits.
Despite the two having the same work history, the second worker would collect $1,080 more in monthly Social Security payments for the rest of their life.
Are you better off with a late claim?
Obviously, everyone would like an extra $1,080 per month in retirement. But the price of this is waiting an extra eight years to claim benefits.
In many cases, this ends up being the best move.
In fact, the National Bureau of Economic Research has shown that 70 is the optimum age for over 90% of workers ages 45 to 62 to start receiving Social Security checks.
For married individuals, having the higher earner wait until 70 to claim benefits also maxes out survivor benefits, which should be a factor in your retirement planning as well.
Still, a lot depends on your goals, life expectancy based on personal and family health history, balances in your retirement plans, and ability to continue working. It’s clear, though, that there can be a profound difference in the monthly benefits earned by people with the exact same work history, just based on the age when they start getting Social Security checks deposited into their bank accounts.
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