A comprehensive study of 20,000 retiree applications found that between the ages of 62 and 66, people are most likely to maximize their lifetime Social Security benefits.
In May, the more than 51 million retirees who received a Social Security check took home an average of $1,916.63, which is about $23,000 on an annualized basis. While Social Security income doesn’t make anyone rich, it does East It is responsible for improving the financial situation of older people more than any other social program.
An analysis by the Center on Budget and Policy Priorities found that 22.7 million beneficiaries—16.5 million of whom were adults age 65 and older—were lifted above the federal poverty line in 2022 by their Social Security income. Meanwhile, 88% of retired workers surveyed in 2024 told the national pollster Gallup that Social Security was a “major” or “minor” source of income.
Given the historical importance of Social Security income to our nation’s retirees, it will be imperative for future generations of retired workers to maximize what they receive from America’s primary retirement program.
If you’re one of the tens of millions of future retirees who will receive benefits, you first need to understand the ins and outs of how your Social Security benefits are calculated. Only then can you understand the importance of claiming age and whether an early claim at age 62 or a true middle ground approach, such as at age 66, makes the most sense.
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Four variables are used to calculate your monthly Social Security check
While there’s no denying that some of the rules or aspects of Social Security can be confusing, the variables the Social Security Administration (SSA) uses to calculate your monthly check are simple and easy to understand.
In no particular order, these variables are yours:
- Work history
- Earnings History
- Full retirement age
- Age Claim
The first two factors, your work and earnings history, go hand in hand. When calculating your monthly benefit, the SSA will consider your 35 highest-earning years of earnings, adjusted for inflation (wages and salaries, but not investment income). This means that if you earned a higher average salary throughout your working career, you are likely to receive a larger Social Security payment in retirement.
The point above is that the SSA will penalize you if you have not worked for at least 35 years. For each year worked less than 35 years, $0 is deducted on average from your monthly benefit calculation.
The third item on the list, your full retirement age, is the age at which you become eligible to receive 100% of your monthly benefit. The problem is that your full retirement age is determined by your birth year, so it’s not something you have any control over.
The fourth variable, and the one most likely to swing the pendulum between your monthly benefit and your lifetime income payment, is the age at which you claim your benefit. While retired beneficiaries can start collecting their checks as early as age 62, the program strongly encourages workers to be patient. This “encouragement” comes in the form of a financial incentive. For every year a worker waits to claim their payment, from age 62 to age 70, their benefit can increase by as much as 8%, as the table shows.
| year of birth | Age 62 | Age 63 | Age 64 | 65 years | 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.
There are clear advantages and disadvantages to receiving benefits at ages 62 and 66.
Each age within the traditional 62-70 age bracket has its own set of advantages and disadvantages, which is why it is so important to understand the monetary implications of the chart.
According to data from Social Security’s latest annual statistical supplement, the two most popular ages in 2022 were 62 (27.3% of new applicants) and 66 (24.7% of new applicants, not counting automatic conversions to disability). Both ages are likely to remain popular with future generations of retirees, and they have clear pros and cons.
Age 62: The main advantage of filing at age 62 is that you can collect your benefit as soon as you are eligible. This can be useful if you have taken early retirement, want to pay off debt, or have one or more chronic health conditions that could shorten your life expectancy.
Another reason why age 62 is likely to remain a popular demand age is the possibility that Social Security benefits will be cut in less than a decade. The Social Security Board of Trustees’ 2024 report estimates that the Old-Age and Survivors Insurance (OASI) Trust Fund will exhaust its asset reserves by 2033. If OASI’s asset reserves are exhausted, benefit cuts of up to 21 percent could be needed to avoid any further cuts by 2098. Taking benefits at age 62 is a way to potentially preempt any future benefit cuts.
On the other hand, if you receive your benefit at age 62, you will be subject to a permanent reduction in your monthly benefit ranging from 25% to 30%, depending on your year of birth.
Additionally, receiving benefits before reaching full retirement age can subject the recipient to various penalties, including the retirement earnings test. This test allows the SSA to withhold part or all of your monthly benefit if your earnings are above predefined income thresholds.
Age 66: The appeal of the middle ground method is that your patience will be (literally) rewarded in the form of a higher monthly benefit. The full retirement age for those born between 1943 and 1954 is 66, while for those born between 1955 and 1959, the full retirement age was increased in two-month increments. Depending on your birth year, waiting just a few years after your initial eligibility may minimize or eliminate any permanent reduction in your monthly benefit.
On the other hand, the downside to claiming your pension at 66 is that you risk leaving a lot of Social Security income on the table if you live a long time. If you live well into your 80s, waiting past 66 would have most likely allowed you to collect even more lifetime income from America’s best retirement program.
Now that we have a better understanding of how reporting your age can dramatically change what you receive on a monthly and lifetime basis, let’s address the million dollar question: Is it better to collect Social Security at age 62 or 66?
Although not a clear-cut analysis, a comprehensive study provides a clear answer.
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Waiting is often rewarded when it comes to social security
Five years ago, researchers at online financial planning firm United Income published a report (“The Retirement Solution Hiding in Plain Sight”) that extrapolated the claiming ages of 20,000 retired workers from data from the University of Michigan Health and Retirement Study. The goal of the study was to determine how many of those 20,000 retired workers made an “optimal” choice—the one that generated the most income. lifetime income adapted to their situation.
Before we look at the results, let me clarify that none of us know our “retirement date” in advance. Without that information, we will always have to make educated guesses about the best age to collect Social Security.
With this in mind, the United Income study found that only 4% of the 20,000 retired workers surveyed had made an optimal claim and maximized their lifetime income.
However, the most important point to remember is the marked gap between actual and optimal claims. According to the results, 79% of retired workers began collecting their benefits at ages 62, 63 or 64; yet only 8% of claims at these three ages would have been optimal on an annual basis. combined Although age 62 offers a higher probability of maximizing lifetime Social Security benefits than ages 63 and 64, the four earliest traditional claiming ages (ages 62 through 65) are, collectively, the least likely to optimize lifetime payments.
At the other end of the spectrum, United Income found that 57% of the 20,000 retirees studied would have maximized their lifetime income if they had claimed at age 70. As for age 66, that was really an average. While that age offers a higher probability of increasing lifetime payments than ages 62 to 65, it is lower than ages 67 to 70.
It’s true that there’s no one-size-fits-all solution when it comes to claims for Social Security benefits for retirees. Each of us must consider our own unique circumstances, which can include everything from access to pension plans and tax implications to marital status and personal health.
For some people, such as a lower-income spouse or someone with a chronic illness, it makes sense to file early. But on a large scale, it turns out that waiting pays off when it comes to getting the most out of Social Security.