Social Security benefits are a cornerstone of retirement income for most Americans, with a 2024 Gallup poll revealing that 88% of retirees rely on these payments to some degree. However, a significant number of people remain unsure about how to maximize their benefits.
According to a survey from the Nationwide Retirement Institute, nearly half of adults are unclear on the best strategies to maximize their benefits, and over 52% don’t fully understand how their claiming age affects their monthly checks.
If you’re approaching retirement, one strategic move could increase your monthly Social Security payments by around $740 on average. Here’s how it works.
The Impact of Claiming Age on Social Security Benefits
Your Social Security benefits are calculated based on your lifetime earnings, but the age you start claiming plays a pivotal role in determining the final amount. Each retiree has a Full Retirement Age (FRA)—between 66 and 67, depending on your birth year. Filing at FRA ensures you receive 100% of the benefits you’ve earned.
However, Social Security allows you to claim benefits as early as age 62 or delay them until age 70. These decisions have significant financial consequences:
- Claiming Early (at Age 62): Benefits are permanently reduced by up to 30%. For instance, the average monthly benefit at age 62 is approximately $1,298.
- Claiming Late (at Age 70): Benefits increase by 8% per year after FRA, culminating in a bonus of 24%–32%. The average monthly benefit at age 70 is around $2,038—a difference of $740 compared to claiming at 62.
This delay not only increases monthly payouts but also provides more income security over the course of your retirement.
How Much Could You Earn Based on Claiming Age?
To illustrate, here’s a breakdown of average monthly benefits by age:
| Age | Average Monthly Benefit |
|---|---|
| 62 | $1,298 |
| 63 | $1,339 |
| 64 | $1,460 |
| 65 | $1,563 |
| 66 | $1,740 |
| 67 | $1,884 |
| 68 | $1,948 |
| 69 | $1,945 |
| 70 | $2,038 |
Source: Social Security Administration, December 2023
The increase in benefits for each additional year of waiting highlights the power of delayed filing. Even a one- or two-year delay can make a substantial difference to your income.
Why Delaying Benefits May Not Be Right for Everyone
While delaying benefits is an effective strategy for maximizing income, it’s not always feasible. Retirement decisions are highly personal, and financial considerations are only part of the equation.
Considerations for Claiming Earlier:
- Health Concerns: If you face significant health risks or a shorter life expectancy, claiming early might allow you to enjoy benefits while you’re still active.
- Financial Need: If you lack sufficient retirement savings or other income sources, filing early might be necessary to cover living expenses.
- Lifestyle Goals: If early retirement is a priority, starting Social Security sooner could allow you to focus on travel or hobbies, even if it means lower monthly checks.
When Delaying Makes Sense:
- Longevity Runs in the Family: If you expect to live well into your 80s or 90s, waiting to claim ensures higher lifetime benefits.
- Strong Savings: If your retirement accounts can support you for several years, delaying benefits can enhance long-term financial stability.
- Spousal Strategies: In some cases, delaying benefits for the higher earner in a couple can maximize survivor benefits.
Maximizing Lifetime Benefits
According to a 2022 study by the National Bureau of Economic Research, delaying Social Security benefits beyond age 65 could increase lifetime income by $158,059 for the median retiree. For married couples, coordinated strategies—such as one spouse claiming early while the other delays—can further enhance financial outcomes.
Additionally, retirees can optimize their benefits through other strategies, such as ensuring a full 35-year work history to avoid low-earning years dragging down their average income.
Final Thoughts
Deciding when to claim Social Security benefits is one of the most important retirement planning decisions you’ll make. While delaying benefits until age 70 can significantly increase monthly payments—by as much as $740—it’s crucial to weigh this decision against your health, savings, and personal goals.
For those who can afford to wait, the payoff is substantial, providing increased financial security in later years. For others, claiming early might align better with lifestyle priorities or financial realities. Ultimately, tailoring your Social Security strategy to your unique circumstances is the best way to ensure a comfortable and fulfilling retirement.
