Few factors affect your Social Security checks more than your age at sign up. You can claim as early as 62, but you’ll shrink your checks by up to 30%. Or you can delay your claim to as late as 70 to maximize your monthly checks. However, you’d have to fund your retirement on your own until then, and some people don’t live long enough to make this worthwhile.
Given these individual considerations, it’s fair to say there’s no best claiming age for everyone. But a recent National Bureau of Economic Research (NBER) survey suggests there is one age that’s best for most Americans — and it could boost your lifetime benefits by more than 20%.
Patience pays off to the tune of $225,944
As I mentioned above, delaying your Social Security application increases your monthly benefit. Your current age and your full retirement age (FRA) — the government-assigned age when you become eligible for your full benefit based on your work history — determines how quickly your checks grow. The table below outlines the rates of benefit increases from 62 to 70 for those with the two most common FRAs: 66 and 67.
|
Benefit Increases By: |
Full Retirement Age (FRA) of 66 |
Full Retirement Age (FRA) of 67 |
|---|---|---|
|
5% per year (5/12 of 1% per month) |
From 62 to 63 |
From 62 to 64 |
|
6.67% per year (5/9 of 1% per month) |
From 63 to 66 |
From 64 to 67 |
|
8% per year (2/3 of 1% per month) |
From 66 to 70 |
From 67 to 70 |
Data source: Social Security Administration.
Larger monthly checks don’t always lead to the largest lifetime benefit, but the NBER survey indicates that this is the case for most people. It found that 91.6% of retired workers would get the biggest lifetime benefit by applying for Social Security at 70 and 99.4% would do best to claim after 65.
The study’s authors found that workers aged 45 to 62 were expected to apply for Social Security at 66 on average. But optimizing their application would boost the median lifetime benefit for these workers by $225,944. This is about 16.7% more than what they would have gotten by claiming at 66.
If you look just at workers aged 45 to 54, the gains are even larger. These workers would see a median 20.3% increase — $271,790 more over their lifetime — by optimizing their Social Security claim.
It’s not for everyone
Numbers like these make a strong argument for delaying Social Security, but claiming at 70 isn’t optimal for everyone. Delaying Social Security would be a big risk for those with terminal illnesses, for example. These individuals often do better by claiming early so they can get as many checks as possible while they’re still alive.
Delaying Social Security benefits also isn’t worth it if it creates financial insecurity in the short term. If you were thinking about claiming Social Security at 62 but decide to wait until 70 to get larger checks, you’ll have to find a way to cover eight years of expenses on your own. With a job or ample personal savings, this might be feasible.
However, if you face eviction or can’t afford to put food on your table, larger Social Security checks in the future won’t help you as much as smaller checks you can have today. But there’s another option we haven’t talked about.
A happy medium
You don’t have to choose one extreme or the other. You can apply for Social Security at any point between 62 and 70. If you want larger checks but delaying until 70 isn’t feasible, you can put off your claim for a few months or years instead.
If you qualify for the $1,915 average monthly Social Security check as of April 2024 at 62, delaying until your FRA of 67 would earn you $2,736 monthly checks and you’d only have to cover your expenses on your own for five years instead of eight.
Even delaying your Social Security claim by one month could raise a $1,915 benefit by $8 to $13 per month. And that bump is permanent. Over 20 years, that adds up to $1,920 to $3,120 in extra benefits.
Only you can decide when you’re comfortable claiming Social Security. Delaying your application could pay huge dividends down the road, but you have to be comfortable with the challenges it could create in the short term. Whatever you do, make sure you don’t wait past 70 to sign up. Your checks don’t grow anymore after this point, so waiting longer to claim will only cost you.
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Statistics Say: This Is the Best Age to Claim Social Security was originally published by The Motley Fool
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