Here’s How Your Social Security Benefits Compare at Age 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've turned out to be 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 polls have found that 80% to 90% of retirees lean on their monthly check, in some capacity, to cover their expenses.

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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 benefits — standing at 10.2% as of 2022 when including these benefits compared to an anticipated 38.7% without them.

Hence, maximizing benefits from Social Security will be crucial for the financial health of most upcoming retirees.

However, to get the most out of your Social Security benefits, you must first grasp how these payments are determined. Once you have this understanding, you can proceed effectively. understand the significance of declaring your birth date , as well as how choosing to collect at an earlier age (such as 62), a mid-range age (like 67), or later (at 70) might affect your monthly benefits.

These four components are used to calculate your monthly Social Security check

Even though Social Security occasionally has unexpected elements for beneficiaries — have you been aware that Social Security benefits may be subject to taxation at the federal level? as well as in nine states ? -- the four factors used by the Social Security Administration (SSA) to calculate your monthly check are straightforward:

1. Work history
2. Earnings history
3. Full retirement age
4. Claiming age

Your job performance and financial record are closely linked. When determining your monthly benefit, the Social Security Administration considers your top 35 years of inflation-adjusted earnings. Generally, individuals with higher average wages or salaries over their lifetimes—excluding investment income—are more probable to get larger monthly benefits upon retiring.

But regardless of how much you earn each year, you'll be penalized if you don't have at least 35 years of work history. For every year less of 35 worked, the SSA will average a $0 into your calculation. If you believe you'll need your Social Security check to make ends meet during retirement, you'll want to work at least 35 years.

The third factor, which is your complete retirement age, is based on the year of your birth It signifies the age at which you qualify to receive 100% of your retired-worker benefit, and this element is the sole aspect beyond our control.

Lastly, but importantly, Your assertion about age can greatly influence the fluctuation in monthly (and lifetime) payouts. Although you can start receiving retirement benefits as young as 62 years old, there’s a financial advantage to waiting longer. Specifically, each additional year an individual delays collecting their benefits from age 62 through age 70 can increase their payment amount by approximately 8%. The chart illustrates how these increments vary based on when your full retirement age falls.

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 is the typical Social Security payout amount for individuals aged 62, 67, and 70 respectively?

Even though each year between the standard ages of 62 and 70 comes with distinct benefits and downsides, Three claimed age groups are expected to become particularly favored in the future. 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.

• What's the reason for collecting at age 62? The attraction of receiving benefits at 62 lies in the ability to access them without delay. Additionally, there’s the potential for extensive reductions in Social Security benefits by 2033 Receiving your payment immediately might be seen as a strategy to avoid potential decreases.

  Conversely, your payment amount will have a permanent reduction of 25% to 30% once you start receiving benefits at age 62, depending on your birth year. Furthermore, you could face additional penalties for filing early. for instance, the retirement income examination , which allows the SSA to withhold some or all of your benefits, depending on your income.

• Why collect at age 67? This could quickly become the most-popular of all claiming ages, given that age 67 is the full retirement age for anyone born in or after 1960 (i.e., most of today's workforce). Initially collecting at 67 means no reduction to your monthly payout. The downside to claiming at 67 is that if you live well into your 80s (or beyond), you'll have, in hindsight, left a lot of Social Security income on the table.
• What is the reason for collecting at age 70? The benefit of filing for benefits at age 70 is that you ensure receiving the highest possible monthly payment, potentially increasing it by 24% to 32% compared to what you'd get at your full retirement age, depending on when you were born. However, there’s no assurance that you’ll live sufficiently long to fully capitalize on this higher lifetime earning potential from Social Security.

Having gained insight into the advantages and disadvantages of these three filing ages, we can now look at what the typical Social Security benefit amounts to 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, with the exception being those who were 62 years old.

Given these points, approximately 590,000 residents live in the area. The average monthly benefit for 62-year-old retired workers was $1,298.26. In December 2023, approximately 2.92 million retired individuals received their benefits. average payout of $1,883.50 at age 67 . Lastly, around 3.01 million retired-worker beneficiaries pocketed an average benefit of $2,037.54 at age 70 .

Across the range of the conventional claiming options, those who started receiving benefits at age 70 obtained, on average, 57% more compared to individuals who began taking payments 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 study indicates that there indeed 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 aim was to determine whether any particular age could maximize Social Security benefits. Here, an “optimal” payout refers to one that would yield 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 had filed for benefits at the most advantageous time. Given that predicting our life expectancy in advance is impossible, there's There will always be some level of uncertainty 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 effects, personal well-being, among others, varies from person to person. Given this personalized scenario, there isn’t a universal plan that fits everyone, resulting 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 eventually turned out to be optimal. .

On the contrary, even though just a tiny fraction of retirees opted to start receiving their Social Security benefits at age 70, this still held significance. ideal for 11,400 out of the 20,000 retired workers reviewed .

Fairly speaking, this does not imply that every upcoming retiree needs to hold off until they reach 70 before starting to collect benefits. Individuals who suffer from one or multiple long-term illnesses which might reduce their life expectancy could indeed have strong justification for opting to receive payments sooner rather than later.

However, according to this comprehensive statistical examination, being patient is probably going to be highly rewarding for most upcoming retirees. This is an important consideration should you anticipate depending on Social Security, in whatever degree, to cover your expenses throughout retirement.

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