Social Security is a major part of many retirees’ financial plans in the United States. In fact, for most older workers, it can be a crucial lifeline for covering their living expenses. As of the start of 2025, the average monthly Social Security check for retired workers is $1,975.34. While this may not seem like a lot of money, it plays a significant role in the financial well-being of retirees. According to a Gallup survey in 2024, 88% of retirees depend on their Social Security payout in some way to meet their expenses.
But when should you start collecting Social Security benefits? Should you claim them at 62, 65, or 70? Each of these ages offers different pros and cons, depending on your personal circumstances. A comprehensive study conducted by United Income has provided some helpful insights into which claiming age might be best for maximizing your lifetime Social Security benefits.
How Social Security Benefits Are Calculated
The Social Security Administration (SSA) uses a combination of four main factors to determine your monthly Social Security payout:
1. Earnings History
Your earnings over the course of your working life play a crucial role in calculating your benefits. The SSA will look at your 35 highest-earning, inflation-adjusted years. The higher your earnings, the higher your benefit will be.
2. Work History
If you have fewer than 35 years of work history, the SSA will include $0 for the missing years in your calculation. This can lower your monthly payout, so it’s important to have a complete work history.
3. Full Retirement Age
Your full retirement age (FRA) is the age at which you can claim 100% of your Social Security benefit. Your FRA depends on your birth year. If you claim benefits before this age, your benefits will be reduced. If you claim after, your benefits can increase.
4. Claiming Age
This is the age at which you decide to begin collecting your Social Security benefits. The earlier you claim (as early as age 62), the smaller your monthly payout will be. However, if you wait until age 70, your monthly benefits will be higher.
The Impact of Claiming at 62, 65, or 70
Each claiming age has its advantages and drawbacks, and choosing the right time to begin collecting benefits depends on various factors, including your health, financial situation, and life expectancy.
1. Claiming at Age 62
The main advantage of claiming Social Security at age 62 is that you start receiving your benefits right away. This can be helpful if you need the money immediately or if you are unable to work. However, claiming early means you will receive a reduced benefit, typically between 25% and 30% less than you would at full retirement age.
Another potential concern is the possibility of Social Security cuts in the future. Some experts warn that the Social Security trust fund could be depleted by 2033, which may lead to benefit reductions. Claiming early at age 62 could be seen as a way to avoid these potential cuts.
2. Claiming at Age 65
Age 65 offers a middle-ground approach. At this age, you won’t face as large of a reduction in your monthly benefit compared to claiming at age 62. However, you still won’t receive the full amount you would get by waiting until your full retirement age. Claiming at 65 might be a good choice if you want to begin receiving your benefits earlier while still avoiding the steep reduction associated with claiming at 62.
However, the downside is that if you live into your 80s or beyond, you might have missed out on a significant amount of money by not waiting until age 70. Furthermore, claiming at age 65 can lead to your benefits being withheld, depending on how much you earn in the years after you start collecting.
3. Claiming at Age 70
Waiting until age 70 to claim Social Security offers the largest monthly payout. If you wait this long, your benefits could increase by 24% to 32% compared to what you would have received at full retirement age. The biggest advantage is that you maximize your monthly payout and receive a higher income for the rest of your life.
However, the downside of waiting until 70 is that you won’t start receiving benefits for several more years, which could mean missing out on the income you need in the short term. Also, there is no guarantee you’ll live long enough to make up for the years you didn’t collect Social Security.
What the Research Says: A Comprehensive Study
United Income’s study, based on data from the University of Michigan’s Health and Retirement Study, analyzed the Social Security claims of 20,000 retired workers. The goal was to identify the “optimal” claiming age for maximizing lifetime Social Security benefits. The study found that most retirees are not maximizing their lifetime benefits. In fact, only 4% of the people in the study had optimized their Social Security payout.
The study discovered that while most retirees claim their benefits early (between ages 62 and 64), those who waited until age 70 had the highest likelihood of maximizing their lifetime benefits. In fact, 57% of the 20,000 retirees in the study would have gotten the most out of Social Security if they had waited until age 70.
Conclusion: Is It Better to Collect Social Security at 62, 65, or 70?
While there are many factors to consider, research suggests that waiting until age 70 is the best way to maximize your lifetime Social Security benefits. However, it’s important to keep in mind that everyone’s situation is different. If you need the money earlier or have health concerns, claiming early might make more sense for you.
Ultimately, deciding when to start claiming Social Security is a personal decision that depends on your financial situation, health, and retirement goals. But the evidence from United Income’s study is clear: For most people, waiting until age 70 will result in the largest and most beneficial Social Security payout over a lifetime.
Must Visit: California State Online