Average Social Security Benefits at Retirement

Social Security is a crucial financial safety net for millions of Americans, providing benefits to retirees, individuals with disabilities, and their families. However, navigating the complexities of the program can be challenging. One of the most important decisions retirees face is when to start claiming their Social Security benefits.

The Social Security Administration recently released data showing the average monthly benefits for retired workers at different claiming ages. At age 62, the earliest age to claim benefits, the average monthly payout is $1,444.42. This amount increases to $2,102.85 for those who claim at age 65 and reaches $2,514.66 for retirees who wait until their full retirement age of 66.

Delaying benefits even further can result in significantly higher monthly payments. Retirees who wait until age 70 to claim Social Security receive an average of $2,201.42 per month, which is approximately $757 more than those who claim at age 62. This increase is due to delayed retirement credits, which add 8% to the monthly benefit for each year claiming is deferred past full retirement age.

Despite the potential for higher benefits, only a small fraction of retirees choose to wait until age 70.

Choosing when to claim Social Security

In 2022, just 8.6% of men and 9.5% of women claimed Social Security at 70 or older.

The most popular age to start benefits is 62, with nearly one-quarter of newly awarded retired workers opting to claim as soon as possible. Financial experts often advise waiting as long as possible to claim Social Security to maximize lifetime benefits. A study by the National Bureau of Economic Research suggests that over 90% of workers would receive the highest total payout by claiming at age 70.

However, individual circumstances, such as health concerns or immediate financial needs, may make claiming earlier a more practical choice. Social Security benefits are calculated based on a worker’s earnings history and the age at which they start claiming. The Social Security Administration first determines the Primary Insurance Amount (PIA), which is the benefit a worker would receive if they claim at their full retirement age.

This amount is then adjusted based on the actual claiming age, with early claiming resulting in a reduced benefit and delayed claiming providing a higher payout. Understanding how claiming age affects Social Security benefits is crucial for retirees to make informed decisions. While there is no universally optimal age to start benefits, being aware of the potential advantages of delaying claims can help retirees maximize their retirement income.

For personalized advice, it is recommended to consult with financial advisors or utilize the resources provided by the Social Security Administration.