Social Security benefits can be an integral source of income for many retirees, but it’s possible you could be leaving money on the table.
Only around 54% of workers say they know how to maximize their Social Security benefits, according to a 2021 survey from the Nationwide Retirement Institute. In addition, only 38% of survey participants were aware that the age you begin claiming benefits has an impact on the amount you receive each month.
Your age can dramatically affect your monthly payments, and in some cases, you could increase the size of your checks by several hundred dollars per month. Here’s how.
How your age will affect your benefits
All older adults are eligible to begin claiming Social Security at age 62, but you can also file anytime after that.
To receive the full amount you’re entitled to based on your earnings, you’ll need to wait until your full retirement age (FRA) — which will be between ages 66 and 67, depending on the year you were born. If you wait until after your FRA to file (up to age 70), you’ll receive a bonus on top of your full benefit amount.
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Waiting just a few years to file can have an enormous impact on the size of your checks. In some cases, you could receive hundreds of dollars more per month or potentially even double your payments.
For example, say your FRA is 67 years old, and you’re entitled to collect $1,600 per month at that age — roughly the average benefit amount among retirees. If you were to wait until age 70, you’d collect a 24% bonus on top of that amount, giving you a total of $1,984 per month. That’s an extra $384 per month compared to if you’d filed at age 67.
The difference between filling at age 62 and age 70 is even more substantial. In this scenario, if you were to file at age 62, your full benefit amount would be reduced by 30%, leaving you with $1,120 per month. That’s $864 per month less than you’d receive by filing at age 70.
When should you claim Social Security?
The best age to claim will depend on your unique situation, so there’s not necessarily a right or wrong answer.
If money is going to be tight in retirement and your savings are falling short, delaying benefits could be a smart move. You’ll receive larger checks for the rest of your life, which can go a long way.
On the other hand, if you expect to live a shorter-than-average lifespan, claiming early could be your best bet. In theory, you should receive the same amount over a lifetime regardless of when you claim. You’ll either collect smaller checks but more of them if you file early, or fewer larger checks if you delay benefits.
However, these calculations assume you’ll live an average lifespan. If you have reason to believe you won’t live into your 80s or beyond, you could potentially receive more money in total if you claim earlier. On the other hand, if you expect to live a long lifespan, you could come out ahead by delaying benefits.
Determining when to file for Social Security is a big decision that will affect the rest of your retirement. While there’s no one-size-fits-all answer, considering all of your options will help you make the best choice for your situation.
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