You may have heard that there's no one best age to claim Social Security, and that's true. Everyone's situation is unique.
Factors like your life expectancy and your financial situation determine which claiming age provides you with the largest lifetime benefit. For some, that's right away at 62, while for others, it might mean delaying until they qualify for their largest checks at 70.
It's impossible to say which age is right for people without knowing about their individual health and finances. That said, we know that one claiming age is statistically much better than the others and could give the typical retirees 10.4% more to spend over their lifetime.
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How your claiming age affects your benefit
Your Social Security benefit is based on two key factors: your average monthly earnings during your 35 highest-earning years, adjusted for inflation, and your claiming age. The more money you earned and paid Social Security taxes on during your working years, the larger your future benefit. That's easy enough to understand. But your claiming age is a bit trickier.
The government assigns everyone a full retirement age (FRA) based on their birth year. For most today, it's 67, though if you were born between 1943 and 1954, it's 66. Those born between 1954 and 1959 have FRAs between 66 and 67. You aren't required to claim at this age, though.
Everyone is allowed to claim as early as 62, though the government reduces your checks for applying early. You lose 5/9 of 1% per month (6.67% per year) for every month of early claiming up to 36 months. If you claim more than three years early, you lose an additional 5/12 of 1% per month (5% per year). Those who apply right at 62 shrink their checks by 25% if their FRA is 66 or 30% if their FRA is 67.
Put another way, every month you delay benefits grows your checks, and that doesn't stop at your FRA. After you reach this age, your checks grow by 2/3 of 1% per month (8% per year) until you qualify for your maximum benefit at 70.
But in each case -- claiming at 62, at your FRA, or at 70 -- you're receiving checks for a different number of years. Claim early and you get more benefits, but each is smaller. Delay and you get fewer checks but more substantial ones. This is where health and financial factors come into play, but there is one age that clearly comes out ahead, statistically speaking.
Research says this is the optimal age to claim Social Security
The optimal Social Security claiming age is generally considered to be the age that nets you the largest lifetime benefit. For those with short life expectancies, this is usually as soon as possible. If you wait to apply, you risk dying before you're able to collect any checks. But for those without a poor health history, delaying is usually the better bet.
A recent National Bureau of Economic Research (NBER) survey looked at data from the 2019 Survey of Consumer Finance and determined that virtually all workers age 45 to 62 should wait until at least 65 to claim Social Security if they want the largest lifetime benefit. It also found that more than 90% of workers in this age range would optimize their benefits by waiting until they qualified for their largest checks at 70.
Doing this would give these workers roughly 10.4% more to spend over their lifetimes. For the poorest retirees, the gain could be as much as 27.4% more spending money. But few workers actually wait this long.
The survey found that only about 10% of workers are likely to wait until their optimal age to apply. It's understandable why. If you are retired and lack adequate personal savings, you may have no other choice but to claim Social Security early, even if you would like to delay. In this scenario, sacrificing a higher lifetime benefit is worth it if it keeps you out of debt.
But it's not without cost. Failing to optimize benefits costs the typical worker about $182,370 in lifetime discretionary spending. That kind of money could go a long way toward covering most retirees' basic expenses, especially when paired with personal savings or income from a job.
What's right for you?
This isn't to say that you have to claim Social Security at 70. You get to decide that. But it's worth thinking through all your options before you make the call. If you would rather not wait that long, understand what you're giving up and ensure you're comfortable with that choice.
If you decide to wait until 70, have a plan for how you'll cover your retirement expenses until you're ready to apply for Social Security. This might involve personal savings, income from a job, or other government benefits if you think you'll qualify for them. And remember: Your decision doesn't have to be set in stone. Just make sure you understand the consequences of changing your mind before you do.
