One Social Security claiming age offers the highest probability of maximizing lifetime Social Security income.
Every month, more than 53 million retired workers receive a Social Security check. For an overwhelming majority of these beneficiaries — 80% to 90%, based on 24 years of annual surveys from national pollster Gallup — their payout is needed, in some capacity, to make ends meet.
For most aged beneficiaries, it’s an absolute necessity to get as much as possible out of America’s leading retirement program. But in order to do so, retirees first need to understand the ins and outs of how their Social Security benefit is calculated. Only then can future generations of retired-worker beneficiaries determine whether collecting benefits early (age 62), taking a middle-ground approach (age 67), or opting for a late-claims approach (age 70) makes the most financial sense.
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These four variables are used to calculate your Social Security check
Although not all aspects of Social Security are easy to understand, the four variables used by the Social Security Administration (SSA) to calculate how much you’ll be paid each month during retirement are straightforward. These four elements are your:
The first two factors (work and earnings history) are inextricably linked. The SSA will account for your 35 highest-earning, inflation-adjusted years when calculating your monthly benefit. This is why individuals with higher average annual income (wages and salary, but not investment income) throughout their lifetime typically receive a larger monthly payout from Social Security during retirement.
Just be mindful of the 35-year qualifier. For every year less than 35 worked, the SSA will average a $0 into your calculation and ensure that you won’t be able to maximize your monthly benefit.
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The third essential element is your full retirement age. This is the age you become eligible to receive 100% of your monthly payout, and it’s entirely determined by the year you’re born. In other words, it’s the only factor you don’t have any control over.
Last but certainly not least is your claiming age. Though retired-worker beneficiaries have the option of initially collecting their payout as early as age 62, the SSA provides a monetary incentive to be patient. Beginning at 62 and continuing until age 70, retired workers who opt to wait to collect their payout can see it grow by as much as 8% per year, as shown in the following table.
| 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.
Collecting benefits at 62, 67, and 70 comes with clear-cut advantages and drawbacks
Despite the wide variance in percentages displayed above, every age within the traditional claiming range of 62 through 70 has its own unique advantages and drawbacks. This is especially true of ages 62, 67, and 70, which should be among the most popular initial collection ages for the foreseeable future.
Age 62
What makes the earliest claiming age so attractive to retirees is not having to wait to get their hands on their benefit. This can be particularly helpful for individuals who don’t have a source of income or are looking to pay down debt.
Additionally, the earliest possible claim might be desirable for beneficiaries who believe Social Security benefit cuts are coming. The latest Social Security Board of Trustees Report estimates that retired workers could see their payouts reduced by up to 23% in 2033.
On the other hand, early filers can expect their monthly benefit to be permanently reduced by up to 25% to 30%, depending on their birth year. They may also be exposed to the retirement earnings test, which allows the SSA to withhold some or all of their payout if they earn too much in a given year and have yet to reach full retirement age.
Age 67
The middle-ground approach should gain popularity among much of today’s workforce for one simple reason: it represents the full retirement age for anyone born in or after 1960. Waiting to collect at your full retirement age ensures you’ll receive no less than 100% of your monthly benefit.
On the flipside, collecting your payout at 67 might result in leaving a significant portion of your lifetime Social Security income on the table if you live into your mid-80s or beyond.
Age 70
Those who choose to wait until age 70 to receive their first retired-worker benefit check will be maximizing their monthly income. Depending on the year you’re born, your benefit will be 24% to 32% higher, when initially collected at 70, than what you would have received at full retirement age.
The potential downside of claiming at 70 is that there’s no guarantee you’ll live long enough to also maximize your lifetime income from Social Security.
With a better understanding of these pros and cons, it’s time to ask the most important question of all: Is it better to collect Social Security at 62, 67, or 70?
According to a broad-based statistical analysis released in 2019, there’s a decisive answer.
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One Social Security claiming age offers the highest probability of maximizing lifetime Social Security income
Six years ago, several researchers at online financial planning site United Income released a report (The Retirement Solution Hiding in Plain Sight) that examined and extrapolated the claiming decisions of 20,000 retired-worker beneficiaries. They did this using data from the University of Michigan’s Health and Retirement Study.
The goal for researchers was to identify which, if any, claiming ages were optimal — with “optimal” representing the initial collection age that would have maximized an individual’s lifetime Social Security benefits.
United Income’s headline takeaway isn’t much of a surprise, considering how many uncertainties retirees are facing. The report showed that only 4% of the 20,000 retired-worker claims analyzed were optimal.
Since none of us know when we’re going to die, there’s no way to know, with any concrete certainty ahead of time, if we’ve made the best possible decision.
Furthermore, we all have unique variables to consider when claiming Social Security benefits. Factors such as financial needs, tax implications, personal health, and marital status vary from one individual to the next. There’s simply no claiming blueprint that works for everyone.
What’s of far more consequence is that researchers found actual claims and optimal claims to be near-perfect inverses of each other. For example, while 79% of the 20,000 retired-worker claims examined had an initial collection age ranging from 62 through 64, researchers found that only 8% of optimal claims occurred at these three claiming ages, combined!
At the other end of the spectrum, very few retired workers chose to initially collect their payout at age 70. However, United Income showed that 57% of the 20,000 claims studied would have been optimal at this age. For those curious, around 10% of claims at age 67 would have been optimal, according to the report.
To be clear, this doesn’t mean every future retired-worker beneficiary should wait until age 70 to collect their payout. There are scenarios in which collecting early makes complete sense, such as when you have a chronic illness that can shorten your life expectancy.
But when examined as a whole, United Income’s statistical analysis reveals the benefits of being patient. Most future beneficiaries would be wise to consider waiting to collect their payout if Social Security is to be a meaningful source of income during retirement.