Social Security is a crucial financial decision for most retirees. The age at which you claim benefits can significantly impact your monthly payments and total lifetime benefits. According to data from the Social Security Administration, the average monthly benefit for retired workers increases with age.
In December 2024, the average benefit for a 62-year-old retiree was $XX, while a 70-year-old retiree received an average of $XX per month. This difference of $806 per month highlights the potential advantages of delaying Social Security claims. Social Security benefits are calculated based on work history, lifetime income, and claim age.
The Primary Insurance Amount (PIA) is determined by applying a formula to a worker’s inflation-adjusted income. It is the benefit amount if claimed at Full Retirement Age (FRA), which is 67 for those born in 1960 or later. The Social Security Administration adjusts the PIA for early or delayed claims, with early claims receiving less than 100% of the PIA and delayed claims receiving more.
Retirees born in 1960 or later can increase their monthly benefits by 77% if they claim at age 70 instead of 62. However, claiming at 70 may not be optimal for everyone, especially those in difficult financial situations or with shorter life expectancies.
Maximizing lifetime Social Security benefits
When considering claiming Social Security in 2025, it is essential to avoid common mistakes. First, estimate your monthly benefits and understand the reduction for early claims before deciding. Second, coordinate with your spouse to develop a joint filing strategy that maximizes benefits for both of you.
Finally, don’t claim early because you fear Social Security is going bankrupt. While the program faces financial challenges, it is funded by payroll taxes and cannot go bankrupt. Economists suggest that most retirees should wait until age 70 to claim Social Security to maximize their lifetime benefits.
Gal Wettstein, a senior research economist at the Center for Retirement Research at Boston College, states, “When you just look at averages, you’re better off postponing claiming until as late as possible, until 70.”
This advice is based on human longevity extending as one age. A man reaching age 62 today has an average life expectancy of 83.6 years. By waiting until age 70 to claim a monthly $2,480, his total lifetime benefits could be around $404,200 over 13.6 years, compared to $362,600 if he claims $1,400 monthly at age 62.
Economist Laurence Kotlikoff advises retirees to plan for maximum longevity, assuming they might live to 100, and delay claiming Social Security to maximize benefits. “Most households are taking Social Security as soon as they retire,” said Kotlikoff, “and that’s way too early.”
In conclusion, while the temptation to claim Social Security early is strong, many experts recommend waiting until age 70 to ensure the highest possible lifetime benefits, especially considering the potential for living well into one’s 80s or beyond. Before deciding, consult a financial advisor or use a Social Security optimization calculator to determine the best strategy for your unique situation.
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