Should You Claim Social Security at 62 or Wait Until 70? New Study Reveals the Best Option.

For an average retired worker, Social Security income is not merely a luxury; it forms a crucial financial base that would be extremely challenging for them to manage without.

In 2023, the Center on Budget and Policy Priorities projected that Social Security lifted 22 million individuals out of federal poverty, with 16.3 million being seniors aged 65 and older. Additionally, a distinct survey conducted by nationally recognized polling firm Gallup in April 2024 focusing on retirees revealed that 88% of participants depended on their payouts, at least partially, for covering living costs.

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In certain cases, the financial stability of retirees relies heavily on optimizing their benefits from Social Security. However, to get the highest amount possible, these individuals must first grasp the intricacies of how their specific benefit is determined. Additionally, they should have a clear understanding of how delaying or choosing their claiming age impacts both their monthly payments and total lifetime earnings.

There's a big difference ranging from taking benefits as soon as possible at age 62 all the way to delaying until the latter part of the conventional claiming period at age 70.

Four factors are utilized to determine your monthly Social Security payment.

America’s premier retirement plan can be somewhat complex to grasp occasionally. Nevertheless, the four factors utilized by the Social Security Administration (SSA) for determining your monthly benefit amount after retiring are fairly straightforward.

• Work history
• Earning history
• Full retirement age
• Claiming age

To figure out the size of your monthly Social Security payment after retiring, the SSA considers your 35 most lucrative, adjusted-for-inflation years in calculating this amount. This record focuses solely on “earnable income,” encompassing wages and salaries, excluding investments. Typically, individuals with consistently high wages or salaries over their working life can expect larger retired-worker benefits from Social Security.

The caveat with this calculation is that the SSA will reduce your benefit by incorporating an average of $0 income for each year below 35 that you haven't worked. Individuals aiming to maximize their potential Social Security benefits should consider working a minimum of 35 years, or even longer.

The third component, known as the full retirement age, signifies the point at which you can start receiving your complete monthly retired-worker benefit amount. is solely determined by the year you were born , so it is something beyond your control.

On the contrary, asserting that age has a greater impact on benefit payouts than any other factor, you also have the option to decide when to first claim your benefits. Even though retirees may opt to receive their Social Security checks beginning at age 62, There's a monetary motivation to practice restraint. For each year that a worker postpones collecting benefits from age 62 to age 70, their payment amount can increase by as much as 8%. The relationship between this delay period and increased payouts is illustrated in the subsequent chart.

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.

The pros and cons of claiming benefits at age 62 versus age 70 are well-defined.

Even though the figures vary significantly in the table provided, each claiming age between 62 and 70 has its own set of benefits and downsides.

Let's examine more closely these advantages and disadvantages for the two extremes within the conventional claiming spectrum: age 62 and age 70.

Age 62

A clear benefit of opting for benefits at age 62 is avoiding the delay before receiving them. This early access can be especially appealing for those retired without an additional income stream or aiming to settle their debts quicker.

Moreover, some of the initial applicants might aim to preempt anticipated reductions in Social Security payments within approximately eight years. Forecasts suggest that the Old-Age and Survivors Insurance Trust Fund (OASI) could deplete its reserve assets by 2033. Should this fund’s resources become exhausted, retired individuals and survivors who receive benefits would be affected. would face extensive reductions in benefits of up to 21% .

Conversely, choosing to start receiving retirement benefits for workers at age 62 involves permanently reducing your monthly payments by 25% to 30%, based on when you were born.

Furthermore, Individuals who file early may still come under the Retirement Earnings Test. This enables the SSA to deduct part or all of your benefit if your earnings exceed certain income limits.

Age 70

On the opposite end of the spectrum, choosing to gather benefits at age 70 guarantees you've optimized your monthly earnings from Social Security Depending on when you were born, the boost in benefits can range from 24% to 32%, compared to what you would get upon reaching your full retirement age.

The possible drawback is that there’s no assurance you will live sufficiently long to optimize your lifelong earnings by waiting until age 70 to claim them.

Having gained deeper insights into why retirees opt to start receiving their benefits at age 62 or 70, we can now revisit our main query: Should you claim your retired-worker benefit at 62 or wait until 70?

A A comprehensive study published six years ago can directly address this issue. .

Someone asserts that age has a statistical advantage over everyone else.

In 2019, experts from the online financial planning firm United Income published an extensive report. The Overlooked Retirement Strategy Right Before Our Eyes That analyzed the Social Security claiming choices of 20,000 retirees utilizing data from the University of Michigan’s Health and Retirement Study.

The objective of United Income was straightforward: to assess how many retirees were making optimal choices when deciding at what age to claim their benefits. Here, “optimal” means choosing the age that would yield the maximum benefit. lifetime income for retirees.

The initial finding of the research was not unexpected: Only 4% of retirees who receive benefits have maximized their payments. .

This remarkably low number is partly because none of us know our "expiry date" in advance. Since we aren't aware of when our time will end, this remains unknown. There will always be a certain level of informed speculation and luck involved. When selecting the optimal initial collection age.

Moreover, each person must take various factors into account when determining the optimal age for their first claim of benefits. Elements like availability of retirement funds, required income levels, potential taxes, marital situation, and personal well-being all play significant roles in the Social Security application process and vary from one individual to another.

Nevertheless, one discovery from United Income's research stood out as particularly significant. The study highlighted an evident reversal when comparing actual versus ideal claiming ages.

For instance, out of the 20,000 retirees surveyed, 79% started collecting their Social Security benefits at age 62, 63, or 64. However, according to researcher analysis, merely 8% of these total applications made at those ages were actually ideal choices. To put this differently, Very few initial applicants managed to secure as substantial benefits from Social Security as they possibly could. .

When compared, despite the fact that just a tiny fraction of the retirees examined originally chose to take their distribution at age 70, it would have been ideal for 57% of the 20,000 retirees reviewed The likelihood of maximizing lifetime Social Security benefits at age 70 was significantly greater compared to any other age within the conventional retirement claiming window.

To make this point clear, United Income's research does not imply that every single future retiree should delay receiving their Social Security benefits until they turn 70. Individuals who earn less, older adults lacking an alternative income source, and those dealing with one or more long-term health issues that might affect their lifespan—all have valid reasons to start collecting their benefit payments much earlier than age 70.

However, when considering the tens of millions of workers who will become eligible for a Social Security benefit in the coming years and decades, statistics show that most could increase their total earnings over their lifetimes by being patient.

The $ 22,924 The Social Security benefit many seniors fail to notice.

If you’re similar to many Americans, you might be lagging several years—or even more—behind on saving for retirement. However, some lesser-known “Social Security strategies” may assist in increasing your retirement earnings. For instance: one simple method could provide an additional $ 22,924 More every year! After mastering strategies to optimize your Social Security benefits, we believe you can retire with confidence and achieve the peace of mind everyone seeks. Just click here to find out how you can gain deeper insights into these tactics.

Check out "The Hidden Truths of Social Security" »

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