Here's How Your Social Security Benefits Compare at Ages 62, 67, and 70
Over eighty years, Social Security has provided a monthly benefit to those who have retired. Although these payments aren’t enriching anyone, they generally prove essential for many retirees.
For the past 23 consecutive years, Gallup has carried out a survey aimed at assessing the degree to which retired workers depend on their received retirement incomes. Social Security These surveys indicate that between 80% and 90% of retirees rely on their regular monthly payment to help with their living costs.
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An independent study conducted by the Center on Budget and Policy Priorities revealed that the poverty rate among individuals aged 65 and older would be almost quadruple what it currently is if not for Social Security. As of 2022, this rate stands at 10.2% due to Social Security benefits; however, without these benefits, it could have soared up to approximately 38.7%.
Hence, maximizing benefits from Social Security will be crucial for the fiscal health of most upcoming retirees.
However, to get the most out of your Social Security benefits, you must first grasp how your payout is determined. Once you have this understanding, you can proceed effectively. understand the significance of your declared age , as well as how choosing to collect at an earlier age (62 years old), a mid-point age (67 years old), or later at age (70 years old) might affect your monthly benefits.
The calculation of your monthly Social Security benefit involves these four elements.
Even though Social Security occasionally has unexpected twists for beneficiaries — were you aware that Social Security benefits may be subject to taxation at the federal level? in addition to nine states The four elements utilized by the Social Security Administration (SSA) to determine your monthly benefit amount are clear-cut:
- Work history
- Earnings history
- Full retirement age
- Claiming age
Your job performance and financial track record are closely linked. When determining your monthly payout, the Social Security Administration considers your top 35 years of inflation-adjusted earnings. Earning a higher average wage or salary over your career—note that investment income does not factor in here—increases your chances of getting a larger monthly benefit once you retire.
However, irrespective of your annual income, you will face penalties unless you have a minimum of 35 years of work experience. For each year below 35 that you've worked, the SSA will incorporate a $0 into your calculations. Should you rely on your Social Security benefits for financial stability post-retirement, aim to accumulate at least 35 years of work history.
The third factor, which is your full retirement age, remains based on the year of your birth It signifies the age at which you qualify to receive your full retired-worker benefit, and this aspect is the sole element beyond our control.
Lastly, but without being of lesser importance, Your stated age can greatly influence the fluctuation of both your monthly and lifetime payout amounts. Although retirees can start receiving benefits as young as 62 years old, there’s a financial motivation to be more patient. Specifically, each additional year an individual delays collecting their benefit from age 62 through age 70 could increase their payment by up to 8%. The table illustrates how these increments vary based on one's specific full retirement age.
| 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% |
Source of data: Social Security Administration.
What is the typical Social Security payout at ages 62, 67, and 70?
Even though each year between the standard ages of 62 and 70 comes with distinct pros and cons, Three claimed age groups are expected to become particularly favored moving forward. : 62, 67, and 70.
Let’s quickly explore the advantages and disadvantages of these three claiming ages and examine more closely what the typical recipient receives monthly when they start at age 62, 67, and 70.
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What's the advantage of collecting benefits at age 62? The attraction of receiving benefits at age 62 lies in not needing to hold off before accessing those funds. Additionally, there’s the potential for extensive reductions in Social Security benefits by 2033 Receiving your payment promptly might be seen as a strategy to avoid potential decreases.
Conversely, if you choose to collect at age 62, your payout will have a permanent reduction of 25% to 30%, varying based on your birth year. Furthermore, you might face additional early filing penalties. for instance, the retirement income examination This enables the SSA to deduct part or all of your benefits based on your earnings.
- Why start collecting at age 67? This might swiftly become the favored claiming age overall, considering that age 67 represents the complete retirement age for those born in 1960 or later, which encompasses much of today’s working population. Starting benefits at 67 ensures there will be no decrease in your monthly benefit amount. However, the drawback to beginning claims at this age is that should you live well past your eighties, retrospectively, it would seem as though you missed out on substantial Social Security payments.
- What is the purpose of collecting at age 70? The benefit of filing for benefits at age 70 is that you ensure receiving the highest possible monthly payment, which can range from 24% to 32% higher compared to what you'd get at your full retirement age (this varies based on when you were born). However, there’s no assurance that you’ll live sufficiently long to fully capitalize on this increased lifetime earning potential from Social Security.
Having gained insight into the advantages and disadvantages of filing for benefits at these three different claiming ages, we can now look at the typical Social Security payout amounts when someone opts to claim them at age 62, 67, and 70.
Each year, the SSA's Office of the Actuary publishes a detailed analysis outlining the average monthly benefit for retired workers aged from 62 up to those over 99 . Please remember this information is derived from the age Of retirees who stopped working as of December 2023, this doesn’t necessarily reflect the age at which they started receiving benefits, unless they were 62 years old.
Given these points, approximately 590,000 residents live in the area. The typical retired worker aged 62 received an average monthly benefit of $1,298.26. In December 2023, approximately 2.92 million retired individuals received distributions. mean benefit amounting to $1,883.50 upon reaching 67 years old Finally, approximately 3.01 million recipients who have retired are benefiting from this program. saved an average advantage of $2,037.54 upon reaching 70 years old. .
Across the range of typical filing options, those who claimed benefits at age 70 received an average benefit that was 57% higher compared to individuals who started receiving them as early as possible.
Statistically speaking, there is an older supervisor citing typical retirement ages
Given the significant variation in monthly benefits, you may be questioning whether choosing certain ages within the typical claiming window offers future retirees an advantage for optimizing their Social Security income. A thorough statistical examination reveals that indeed there is such an optimal age.
In 2019, researchers from United Income published a study, The Overlooked Retirement Strategy Right Before Our Eyes , analyzed the claim decisions of 20,000 retirees utilizing data from the University of Michigan’s Health and Retirement Study. The objective was to determine whether any particular age leads to maximizing Social Security benefits. Here, an “optimal” payout refers to one that yields the highest possible benefit. lifetime (key word!) income collection.
As one would anticipate, this comprehensive study revealed that merely 4% of the 20,000 retirees analyzed filed for benefits at the ideal time. Given that predicting our life expectancy precisely isn’t possible, there’s There will always be a certain level of speculation involved. When reaching our claim determination.
Moreover, each individual follows their distinct journey towards retirement. The mix of financial requirements, available retirement savings options, marital situation, tax consequences, personal well-being, among others, varies from person to person. Given this personalized scenario, there isn’t a single plan suitable for everyone, which can result in differences in when and how people choose to claim their benefits.
However, the more important find is the nearly perfect inversion between actual and optimal claims. Although 79% of the 20,000 retired workers began receiving their benefit from ages 62 through 64, Only 8% of the claims in this range were eventually found to be optimal. .
On the contrary, even though just a tiny fraction of retirees chose to start receiving their Social Security benefits at age 70, this still occurred. ideal for as much as 57% of the 20,000 retirees reviewed .
To be fair, this does not imply that all future retirees must wait until they reach 70 years of age before starting to collect their benefits. For example, individuals who suffer from one or multiple long-term illnesses that could reduce their life expectancy might have strong justification for opting to receive payments at an earlier age.
However, according to this comprehensive statistical examination, being patient is likely to yield substantial rewards for most future retirees. This is an important consideration if you anticipate relying on Social Security, in whatever form, to cover your expenses during retirement.
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