Regardless of whether you’ve just entered the labor force or left it a long time ago, there’s a high probability you’ll rely on your Social Security check, in some capacity, to make ends meet.
For 23 years, national pollster Gallup has conducted an annual survey of retirees to gauge how important the Social Security income is they receive. Between 80% and 90% of respondents have consistently noted that Social Security is a “major” or “minor” income source. In other words, getting as much as possible out of Social Security isn’t a luxury -- it’s vital to the financial well-being of aging Americans.
But in order to maximize what you’ll receive from America’s leading retirement program, you’ll first need to understand the nuts-and-bolts of how your benefit is calculated. Only then can you fully comprehend the ramifications of your claiming age and what an early (age 62), middle-ground (age 66), or late (age 70) claims approach can have on your monthly Social Security check.
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These four variables are used to calculate your monthly Social Security check
Despite Social Security’s complexity, the four factors the Social Security Administration (SSA) uses to calculate your monthly check couldn’t be more straightforward:
- Earnings history
- Work history
- Full retirement age
- Claiming age
The first two variables are inextricably linked. When the SSA calculates your monthly benefit, it does so by taking into account your 35 highest-earning, inflation-adjusted years. If you average a higher wage or salary throughout your decades in the workforce, it’s likely you’ll receive a beefier monthly payout from Social Security during retirement.
But there’s a bit of an asterisk to this calculation. Regardless of how much you earn annually, you’ll be penalized if you fail to work at least 35 years. For every year less of 35 worked, the SSA averages a $0 into your calculation.
The third line item -- full retirement age -- represents the age you become eligible to receive 100% of your retired-worker benefit. Since your full retirement age is determined by the year you’re born, it’s the one factor you have no control over.
The fourth variable used to calculate your monthly Social Security check, and the one with the greatest ability to swing the payout pendulum, is your claiming age. Even though retired-worker benefits can be collected as early as age 62, the program incents patience. For every year a worker waits to claim their payout, beginning at age 62 and continuing through age 69, their benefit can grow by as much as 8%, as demonstrated in the table below.
| 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.
What’s the average Social Security benefit at ages 62, 66, and 70?
With a better understanding of the dynamics that go into Social Security benefits, let’s dig into the meat and potatoes of why 62, 66, and 70 are expected to be popular claiming ages moving forward. Afterwards, we can examine what the average monthly payout is at each respective age.
- Age 62: The prime reason age 62 is so popular is because retired workers don’t need to wait to get their hands on their monthly check. There’s also the possibility of sweeping benefit cuts happening by as early as 2033. Thus, an early claim may be viewed as a way to front-run any potential payout reduction. Conversely, collecting at age 62 can permanently reduce monthly payouts by 25% to 30%, as well as expose beneficiaries to other early-filer penalties, such as the retirement earnings test, which allows the SSA to withhold benefits.
- Age 66: What’s attractive about the middle-ground approach is that it allows retirees to minimize or eliminate any payout reductions by waiting just a few years to collect their benefit. Age 66 represents the full retirement age for persons born from 1943 through 1954. On the other hand, if you live well into your 80s, or beyond, collecting at 66 will almost certainly result in you leaving a lot of Social Security income on the table.
- Age 70: The beauty of being patient and waiting to collect at age 70 is that you’ll be maximizing your monthly benefit. Depending on your birth year, you’ll receive between 24% and 32% more than what you would have at your full retirement age. The potential downside of waiting eight years before claiming your retired-worker benefit is that you may not live long enough to also maximize your lifetime payout.
The million-dollar question is: What can retirees expect to receive each month at 62, 66, and 70?
To answer this, let’s turn to data published annually by the SSA’s Office of the Actuary (OACT). The SSA’s OACT listed the average monthly benefit for retired workers in December 2023 at every age ranging from 62 through 99-plus. Keep in mind that the following payouts are based on the age of retired-worker beneficiaries in December 2023 and, with the exception of age 62, isn’t necessarily indicative of their claiming age.
In December 2023, roughly 590,400 aged 62 retired-worker beneficiaries brought home an average check of $1,298.26. In comparison, around 2.11 million aged 66 retired workers received an average payout of $1,739.92. Lastly, approximately 3.01 million retired workers who were 70 years old in December 2023 collected an average Social Security check totaling $2,037.54.
In short, retired workers at age 70 received 57% more per month than the earliest filers.
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The data doesn’t lie: There is a statistically superior claiming age
Based on the OACT’s data set, you might be wondering if one or more Social Security claiming ages is superior, in terms of lifetime benefit collection. This was a question the researchers at United Income tackled in their 2019 report, The Retirement Solution Hiding in Plain Sight.
Using data from the University of Michigan’s Health and Retirement Study, United Income extrapolated the Social Security claiming decisions of 20,000 workers to determine if they were optimal. By “optimal,” United Income means a decision that resulted in the maximum lifetime income from Social Security. Understand that maximizing lifetime income may not be synonymous with maximizing monthly payouts.
The first key takeaway from United Income’s analysis wasn’t a surprise: only 4% of the retired workers studied made an optimal claim.
Since none of us knows our “departure date” ahead of time, there’s always going to be some level of guesswork involved when initially filing for benefits. Additionally, we all have our own unique set of factors that influences our claiming decision, such as retirement savings, personal health, marital status, tax implications, and so on. This means there isn’t a one-size-fits-all blueprint when claiming benefits.
However, the standout finding from United Income’s analysis is the almost perfect inversion between actual and optimal claims.
On one hand, 79% of retired-worker beneficiaries began collecting their payout from ages 62 through 64. Yet researchers note that only 8% of the 20,000 retired workers studied would have optimized their lifetime collection at these three ages… combined!
On the other end of the spectrum, age 70 wasn’t a particularly popular claiming age, but it would have been optimal for 57% of retired workers. It’s the statistically superior claiming age within the initial collection range of 62 through 70.
To be clear, United Income’s findings don’t imply that every future retiree should wait until age 70 to begin collecting their payout. The factors that make us unique, which may include health complications that can lower life expectancy or a substantially lower lifetime income than our spouse, might make an early filing completely logical.
But when examined as a whole, waiting to collect benefits appears to be the statistically favorable choice future generations of retirees would be wise to consider.
