Here’s the average Social Security benefit at ages 62 and 67

Whether you’re already retired or just entering the workforce, there’s a good chance that the income you receive from Social Security will be needed to get by in retirement.

For more than two decades, the national Gallup poll has polled retirees and non-retirees to gauge how dependent they currently are (or expect to be, in the case of non-retirees) on their Social Security check. Between 80% and 90% of then-retirees noted that they rely on their monthly paycheck to some extent to cover their expenses. Meanwhile, 76% to 88% of non-retirees anticipate needing Social Security income to manage their expenses when they hang up their work clothes for good.

In other words, getting as much as possible from Social Security is vital to the financial well-being of the aging workforce.

Image source: Getty Images.

But to maximize what you’ll get from Social Security, you’ll first need to understand how your benefit is calculated. Only then can you appreciate the importance of claiming age, which can swing the payout pendulum even between an early claiming strategy (age age 62) and in the middle (age 67).

These four criteria are used to calculate your Social Security check

Despite the many quirks of Social Security — for example, some of your benefits may be taxable federally and in nine states — the variables used by the Social Security Administration (SSA) to calculate your monthly check are simple and easy understandable. These four criteria are you:

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

The first two factors are as inseparable as the two sides of a coin. When the SSA calculates your monthly Social Security benefit, it will consider your 35 years of highest earnings, adjusted for inflation. Note that “highest earnings” includes your salary and wages, but does not take into account investment income.

This calculation is also designed to penalize people who do not have at least 35 years of work. For each year worked less than 35, the SSA will calculate an average of $0. Regardless of your average annual earned income, working less than 35 years guarantees you won’t be able to maximize your Social Security payments.

Full retirement age is the only one of the four variables over which you have no control. It is determined entirely by the year you were born and is the age at which you become eligible to receive 100% of your pension benefit.

Your claim age can change the monthly and lifetime payment pendulum more than any other factor. Although benefits for retired workers can be collected as early as age 62, America’s largest retirement program encourages patience by providing a cash incentive. For each year that an eligible worker waits to claim their payment, beginning at age 62 and continuing through age 69, their benefit can increase by up to 8%. You can see these scenarios unfold in the table below.

Data source: Social Security Administration.

What is the average Social Security benefit at ages 62 and 67?

Each age in the traditional age range of 62 to 70 comes with its own unique set of advantages and disadvantages. But in this range of possible early draft picks, ages 62 and 67 are likely to be among the most popular going forward.

Let’s take a quick look at the pros and cons associated with claiming at these two ages and examine their average payouts.

62 years old: What makes age 62 such an attractive age to start collecting Social Security income is that you don’t have to wait to receive your retirement benefit. In 2022, 27.3% of all new claimants began collecting their payments at age 62, making it the most popular claim age.

The other fascination with a 62-year-old claim may have to do with projections that call for the Old Age and Survivors Insurance Trust Fund (OASI) to exhaust its asset reserves by 2033. OASI is the segment of Social Security that provides pensioner benefits. workers and surviving beneficiaries.

Although the depletion of OASI’s asset reserves does not mean bankruptcy or insolvency, it does suggest that the current payment schedule, including cost of living adjustments (COLAs), is not sustainable. With benefit cuts of up to 21% looming over nine years, an early claim could be seen as a way to anticipate a reduction in payments.

On the other hand, claiming benefits at age 62 means accepting a permanent reduction in your monthly payment of up to 25% to 30%, depending on your year of birth.

It can also expose you to other early filing penalties, such as the retirement earnings test, which allows the SSA to withhold some or all of your benefits if you earn above certain income thresholds.

67 years old: The appeal of the middle law claims approach is simple: there is no permanent reduction in monthly benefits.

The full retirement age for workers born in or after 1960 (the majority of today’s workforce) is 67. Waiting five years after initial eligibility before collecting your Social Security benefit ensures that you will receive 100% of what you are owed each month.

In addition, claimants aged 67 need not worry about the retirement earnings test, which does not apply once a worker reaches full retirement age.

The potential downside of collecting benefits at age 67 can be seen if you live to be 80 or even older. In such an event, you will likely be leaving a significant amount of lifetime Social Security income on the table compared to an even later claim.

With a clearer understanding of the pros and cons of collecting benefits at these two ages, let’s see what the average Social Security benefit is at ages 62 and 67.

Based on data from the SSA Office of the Actuary, just over 590,000 retiree beneficiaries age 62 took home an average check of $1,298.26 in December 2023. By comparison, the nearly 2.92 million older retiree beneficiaries of 67 brought home a check in December 2023. average check of $1,883.50.

It is important to note that the Actuary’s Office data set is based on age of the recipient in December 2023 and is not necessarily an indication of them claiming ageexcept for age 62. However, 67-year-old filers took home about 45 percent more per month than first-time filers.

Image source: Getty Images.

Statistically speaking, there is a “best” age to claim

Based on the data above, you may be wondering if waiting to collect your Social Security benefit is a smart move. The honest answer is that it depends on many factors.

The reason why choosing the right age to claim is so difficult is that there is no plan to follow. Each of us takes a unique path to get to where we are, which means we’ll have different variables to consider when we reach the age to claim our Retired Worker Benefit. This includes our ability to access retirement funds (401(k), Individual Retirement Accounts (IRAs), and so on), tax implications, monthly financial needs, marital status, and personal health, among other factors.

That said, a study was conducted five years ago by online financial planning company United Income that looked at the parallel between actual claim ages and optimal claim ages for 20,000 retired workers. “Optimal” in this sense refers to the claim age that would be maximized lifetime benefits collected.

What the researchers found was that very few of the 20,000 retired workers studied — just 4 percent — got as much as they could from America’s top retirement program.

However, the biggest takeaway was the notable reversal between actual and optimal claims. For example, 79% of applicants studied took their pay from age 62 to 64. But when it comes to maximizing lifetime benefits collected from Social Security, only 8 percent of claims from ages 62 to 64 were optimized.

At the other end of the spectrum, only a very small percentage of the 20,000 retired workers began collecting their payments at age 70. However, 70 would have been the optimal age to claim benefits for 57 percent of retired workers surveyed by United Income. For what it’s worth, age 67 was the second most likely to optimize lifetime benefit collection, though it followed age 70 by a country mile.

Again, these findings don’t automatically mean that waiting will maximize what you get from Social Security. For example, if you have one or more chronic health conditions that can shorten your life, a previous statement can make a lot of sense.

But when looking at the broad spectrum of claims by retired workers, the United Income study makes it pretty clear that, statistically speaking, there is a “best” age to claim. Future retirees would be wise to consider the findings of this study before eagerly jumping at the chance to collect their Social Security check.