Differences in claiming age can swing the monthly and lifetime payout pendulum for Social Security income.
Regardless of whether you’re already retired or just entering the workforce, there’s a high likelihood that the income you receive from Social Security will be necessary to make ends meet during retirement.
For more than two decades, national pollster Gallup has been surveying retirees and non-retirees to gauge how reliant they currently are (or expect to be, in the case of non-retirees) on their Social Security check. Between 80% and 90% of then-retirees noted that they lean on their monthly payout, in some capacity, to cover their expenses. Meanwhile, 76% to 88% of non-retirees anticipate needing their Social Security income to manage their expenses when they do hang up their work coats for good.
In other words, getting as much out of Social Security as possible is vital to the financial well-being of our aging workforce.
Image source: Getty Images.
But in order to maximize what you’ll receive from Social Security, you’ll first need to understand the nuts and bolts of how your benefit is calculated. Only then can you appreciate the importance of claiming age, which can swing the payout pendulum between even an early (age 62) and middle-of-the-road (age 67) claiming strategy.
These four criteria are used to calculate your Social Security check
Despite Social Security’s numerous quirks — for example, a portion of your benefits may be taxable at the federal level and in nine states — the variables used by the Social Security Administration (SSA) to calculate your monthly check are straightforward and easy to understand. These four criteria are your:
- Work history
- Earnings history
- Full retirement age
- Claiming age
The first two factors are as inseparable as the two sides of a coin. When the SSA calculates your monthly Social Security benefit, it’ll take into account your 35 highest-earning, inflation-adjusted years. Take note that “highest-earning” encompasses your wages and salary but doesn’t take into account investment income.
This calculation is also designed to penalize folks who don’t have at least 35 years of work history. For every year less than 35 worked, the SSA will average a $0 into your calculation. Regardless of your average earned income per year, working less than 35 years guarantees you won’t be able to maximize your Social Security payout.
Full retirement age is the only one of the four variables that you have no control over. It’s entirely determined by the year you’re born and represents the age you become eligible to receive 100% of your retired-worker benefit.
Your claiming age can shift the monthly and lifetime payout pendulum more than any other factor. Though retired-worker benefits can be collected as early as age 62, America’s top retirement program encourages patience by dangling a monetary incentive. For every year an eligible worker waits to claim their payout, beginning at age 62 and continuing through age 69, their benefit can grow by as much as 8%. You can see these scenarios play out 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 and 67?
Every age within the traditional claiming age range of 62 through 70 comes with its own unique set of advantages and drawbacks. But in this gamut of possible initial collection choices, ages 62 and 67 are liable to be among the most popular moving forward.
Let’s take a brief look at the pros and cons associated with claiming at these two ages, and examine their average payouts.
Age 62: What makes age 62 such an attractive age to begin collecting Social Security income is that you don’t have to wait to receive your retired-worker benefit. In 2022, 27.3% of all new claimants began collecting their payout at age 62, making it the most popular claiming age.
The other fascination with an age 62 claim may have to do with forecasts that call for the Old-Age and Survivor’s Insurance Trust Fund (OASI) to exhaust its asset reserves by 2033. The OASI is the segment of Social Security that provides benefits to retired workers and survivor beneficiaries.
While depleting the OASI’s asset reserves doesn’t mean bankruptcy or insolvency, it does suggest the current payout schedule, including cost-of-living adjustments (COLAs), isn’t sustainable. With benefit cuts of up to 21% looming in nine years, an early claim might be viewed as a way to front-run a payout reduction.
On the other hand, claiming benefits at age 62 means accepting a permanent reduction to your monthly payout of up to 25% to 30%, depending on your birth year.
It can also expose you to other early filer penalties, such as the retirement earnings test, which allows the SSA to withhold some or all of your benefit if you earn above certain income thresholds.
Age 67: The appeal of the middle-ground claims approach is simple: No permanent reduction to monthly benefits.
The full retirement age for workers born in or after 1960 (the majority of today’s labor force) is 67 years. Waiting five years, following initial eligibility, before collecting your Social Security benefit ensures you’ll receive 100% of what you’re due on a monthly basis.
Furthermore, age 67 claimants don’t have to worry about the retirement earnings test, which isn’t applicable once a worker reaches their full retirement age.
The potential downside of collecting benefits at age 67 can be seen if you live well into your 80s or even longer. In such an event, you’ll likely have left a significant amount of lifetime Social Security income on the table, compared to an even later claim.
With a clearer understanding of the advantages and drawbacks of collecting benefits at these two ages, let’s dive into what the average Social Security benefit is at 62 and 67.
Based on data from the SSA’s Office of the Actuary, a little over 590,000 aged 62 retired-worker beneficiaries took home an average check of $1,298.26 in December 2023. Comparatively, the nearly 2.92 million aged 67 retired-worker beneficiaries in December 2023 brought home an average check of $1,883.50.
It’s important to note that the Office of the Actuary’s data set is based on the age of the recipient in December 2023, and isn’t necessarily indicative of their claiming age, with the exception of age 62. Nevertheless, age 67 claimants took home about 45% more per month than the earliest filers.
Image source: Getty Images.
Statistically speaking, there is a “best” claiming age
Based on the data above, you might be wondering if waiting to collect your Social Security benefit is the smart move. The honest answer is that it depends on a lot of factors.
The reason choosing the right claiming age is so difficult is because there’s no blueprint to follow. Each of us walks a unique path to get where we are, which means we’re going to have different variables to consider when we reach the eligible age to claim our retired-worker benefit. This includes our ability to access retirement funds (401(k)s, individual retirement accounts (IRAs), and so on), tax implications, monthly financial needs, marital status, and personal health, among other factors.
With this being said, a study was conducted five years ago by online financial planning company United Income that examined the parallel between actual claiming ages and optimal claiming ages for 20,000 retired workers. “Optimal” in this sense refers to the claiming age that would have maximized lifetime benefits collected.
What researchers found was that very few of the 20,000 retired workers studied — only 4% — got as much as possible out of America’s top retirement program.
However, the bigger takeaway was the notable inversion between actual and optimal claims. For example, 79% of the claimants studied took their payout from ages 62 through 64. But in terms of maximizing lifetime benefits collected from Social Security, only 8% of claims from 62 through 64 were optimized.
On the other end of the spectrum, only a very small percentage of the 20,000 retired workers began collecting their payout at age 70. Yet, 70 would have been the optimal age to claim benefits for 57% of the retired workers analyzed by United Income. For what it’s worth, age 67 had the second-highest probability to optimize lifetime benefit collection, though it trailed age 70 by a country mile.
Once again, these findings don’t automatically mean that waiting is going to maximize what you’ll receive from Social Security. For instance, if you have one or more chronic health conditions that can shorten your lifespan, an earlier claim can make a lot of sense.
But when looking at the broad spectrum of retired-worker claims, United Income’s study pretty clearly shows that, statistically speaking, there is a “best” claiming age. Future retirees would be wise to consider this study’s findings before impatiently jumping at the chance to collect their Social Security check.
