Should You Take Social Security at 62 or 70? This is what research says

By | March 16, 2024

Social Security benefits are critical to the finances of tens of millions of American seniors. More than 40% of baby boomers say their monthly checks will be their primary source of retirement income, according to a 2023 report from the Transamerica Center for Retirement Studies.

When it comes to maximizing the size of your monthly Social Security checks, the age at which you start receiving them is one of the most important factors. You can apply once you turn 62 or anytime after, but the longer you wait (until age 70), the more you’ll receive each month.

Person looking out a window.

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There is much debate about when is the best time to start taking benefits: some experts urge retirees to delay, while others encourage filing early. But what does the data say about that? An extensive study shows that there is a clear answer.

How your age affects your benefit amount

Before you decide at what age you’ll start receiving benefits, it’s first important to know your full retirement age (FRA) and how it will affect your payments. Your FRA is the age at which you will receive what the government calculates as the full retirement benefit you are eligible for based on your work history. Although the FRA varies depending on your year of birth, for anyone who has not yet retired it will be between the ages of 66 and 67.

Chart of Social Security's full retirement age.Chart of Social Security's full retirement age.

Image source: The Motley Fool.

Filing as early as possible (when you turn 62) will reduce your benefits by up to 30% compared to what you would receive at your FRA. If you delay taking benefits until age 70, you will receive your full benefit amount plus a bonus of between 24% and 32% per month, depending on your FRA.

A common misconception about filing early is that your benefits will only be reduced until you reach your FRA, at which point you will start receiving larger checks. In reality, however, these adjustments are permanent. If you file early, you will receive smaller monthly payments for the rest of your life. But this also means that by delaying benefits you will receive permanently higher benefits.

Is it better to claim social security early or delayed?

While the right decision for you depends on your unique situation, it can be helpful to see what the data says about claiming at different ages.

In 2019, researchers at United Income studied retirees’ claiming decisions and how those choices affected their overall income over the remainder of their retirement. From there, they determined how many retirees made the financially optimal decision to maximize their lifetime income.

They found that while claiming early was the most popular choice (about 70% of retirees file before turning 64), it wasn’t the best financial decision for most people. In fact, when it comes to maximizing lifetime income, claiming at age 62 or 63 was the optimal choice for only 6.5% of study participants.

In contrast, waiting until age 70 was the least popular claiming decision, but also the most lucrative. According to the researchers, only 4% of retirees filed at age 70, yet 57% of participants could have received more money over their lifetime if they had filed at this age.

These decisions also had a huge impact on the financial lives of retirees. The researchers found that the average retiree household misses out on about $111,000 in lifetime income by filing at the suboptimal age. Furthermore, around 1 in 5 older people at risk of not being able to afford their pension would have seen an improvement in their situation if they had applied at the financially optimal age.

What does this mean for you?

According to the data, 70 is the ideal filing age for most retirees. However, this research only takes into account the financial side of this decision and therefore does not necessarily tell the full story.

If you want to maximize your total income in retirement, waiting until age 70 is often the best move. You’ll receive hundreds of dollars more per month by delaying filing for Social Security, which can go a long way if your benefits will be your primary (or only) source of income in retirement.

That said, claiming early can also be smart in some situations. For example, perhaps you have a robust pension fund and want to retire earlier. If you don’t think you need a larger Social Security payment to support your budget, filing early can make it easier to retire in your early 60s without having to rely solely on your savings and investments.

And if you have reason to believe you may not live longer than average, filing early could mean you earn more over your lifetime. Each check will still be smaller, but if you’re not well into your 70s or older, you can collect more in total by filing early.

There’s no one best age at which everyone should take Social Security, but as you weigh the choice, it’s important to be honest with yourself about your retirement goals and expectations. While you wait until you’re 70, you can maximize your monthly benefits. However, consider the big picture before deciding if this is really the right move for you.

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Should You Take Social Security at 62 or 70? Here’s what research says, originally published by The Motley Fool

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