Here’s the average age of retirees who claim Social Security and the monthly benefit they receive

One of the most important retirement decisions you’ll ever make is when to claim Social Security.

Most retirees can claim their monthly benefit starting at age 62, but waiting to claim results in a larger monthly government check. Your benefits usually peak at age 70.

This leaves many options for retirees. Many financial decisions often benefit from following the wisdom of the crowd. Summarizing the decisions and assessments of millions into an average can provide a better guide to what to do than following the advice of a single person.

But if you follow the average retiree’s claim strategy, you could end up worse off in retirement.

Here is the average age of retirees who claim Social Security

The average age at which retirees claim Social Security has risen steadily since the beginning of the 21st century. This is mainly due to changes in Social Security laws.

Congress passed new legislation in 1983 that raised the full retirement age from 65 to 67 in two installments. The first installment occurred in the early 2000s, when workers born in 1937 or later saw their full retirement age increase to eventually reach 66. The second installment is currently taking effect as workers born in 1955 or later see their retirement age gradually increase to 67. This transition will end in 2027.

Since full retirement age determines when someone qualifies for their standard benefit or primary insurance amount, the country saw a significant increase in the average claiming age as workers adjusted to Social Security changes in the 10 years from 2004 to 2014. The average retiree claimed benefits at age 63 years and 4 months in 2004. A decade later, the average had increased by about a year and is likely to see another increase as Americans adjust to receiving full retirement benefits at age 67 years old.

Today, the average retiree seeks benefits at age 65, according to the latest data provided by the Social Security Administration on new retirement benefits due in 2022.

The two most popular claim ages are 62 (first year of eligibility) and 66. Fewer than 10% wait until age 70 to maximize their monthly benefit.

Here is the average of the new benefits claimants receive

In 2022, the average retirement benefit for new claimants (not including disability conversions) was $1,938.75. This translates to a 2024 benefit of $2,174.86 based on cost of living adjustments (COLA) for 2023 and 2024.

However, it is worth noting that the average benefit for those who claimed at age 65 was less than the average benefit. The average 65-year-old claiming benefits in 2022 received just $1,874.56 a month. There are several explanations for this discrepancy.

The story continues

First, the amount your monthly check increases each month leading up to your full retirement age is less than the increase you receive in your benefits when you delay beyond full retirement age. You get an extra 5/12 of 1% to 5/9 of 1% of your full retirement benefits for each month you get closer to your full retirement age. Wait until you are past full retirement age and you will receive 2/3 of 1% of your standard benefit for each month you delay.

The second explanation is that low-income workers claim benefits earlier than high-income workers, on average. Their primary insurance sum is significantly lower than that of those who wait until age 70. This early claim makes sense in cases where a career may have been cut short or a person does not have enough personal retirement savings to get by without claiming Social Security early.

Should you be looking at the average retirement age?

As mentioned, the wisdom of the crowd can serve as a guide as you forge your own path. The age 65 claim makes intuitive sense to many people. It has long been held as the standard retirement age (perhaps a holdover from the original Social Security law). It’s also the age you become eligible for Medicare, making it easier to quit work.

But claiming Social Security at age 65 may be a mistake for many retirees, according to hard data and several extensive studies.

If you want to maximize your lifetime Social Security benefits, you will most likely do so by waiting until age 70 to apply. Life expectancy data from the CDC shows that the average person in their 60s will live long enough to receive more benefits during their lifetime by waiting to claim. So unless you have reason to expect that you will have a shorter than average life expectancy, you will likely get more benefits by delaying as long as possible.

A study conducted by United Income in 2019 also shows that most retirees would maximize their wealth by delaying until age 70. 57% of households would maximize their chances of being able to afford their pension by waiting to claim until age 70. In comparison, only 8% of households are better off claiming before age 65.

Keep in mind that retirement planning depends a lot on personal circumstances. What works for one person may be a bad decision for another. The wisdom of the crowd can only get you so far. You have to determine what works best for you.

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Here’s the Average Age of Retirees Who Claim Social Security and the Monthly Benefit They Receive was originally published by The Motley Fool