The Shocking Truth About When to Claim Social Security

Choosing the right age to start receiving Social Security benefits is a pivotal decision that will influence your monthly income for the rest of your life. While you can claim benefits as early as 62, waiting can increase your monthly checks. If you delay until 70, you’ll receive your full benefit plus an additional 24% monthly for life. But what’s the best age to maximize your returns? Let’s dive into the research.

Optimal Age for Social Security

A 2019 study by United Income analyzed retirees’ claiming decisions and their lifetime benefits. The study aimed to determine the percentage of retirees who made the “optimal” decision to maximize their lifetime income. The results were intriguing:

  • Only 6.5% of retirees found it optimal to claim at 62 or 63.
  • A significant 57% could have increased their lifetime earnings by waiting until 70 to claim benefits.
  • On average, households missed out on approximately $68,000 in benefits by not making the optimal claiming decision.
  • The study also highlighted that senior poverty rates could be halved if all retirees claimed benefits at the optimal age.

How much are you missing out on taking Social Security Early?

“How Much Lifetime Social Security Benefits Are Americans Leaving On the Table?” was the name of a study by the National Bureau of Economic Research (NBER) published in November of 2024. The National Bureau of Economic Research found that few Americans delay claiming their social security benefits. The study suggests that waiting until age 70 can increase benefit amounts, yet only 10.2% of retirees do so.

Considering the data, it appears that waiting until you are 70 might be the best decision. The results of this paper show that based on the present value of a household’s lifetime discretionary spending, the median loss is $182,370. By optimizing, there could be an increase of 10.4 percent in the lifetime spending of typical workers.

Reasons to Claim Early

While the financial benefits of waiting until 70 are evident, the decision isn’t solely about money. Other factors can influence this choice:

  1. Health Concerns: If you’re facing health challenges and might not have a long retirement, claiming earlier could be more beneficial.
  2. Desire for Early Retirement: Some might prioritize retiring early over larger monthly checks. If health deteriorates in the late 60s or early 70s, earlier claiming might be regret-free.
  3. Value of Extended Retirement: For some, the joy of a prolonged retirement outweighs the benefit of bigger monthly checks. Claiming early can facilitate an earlier retirement, even if it means smaller checks.

Making Your Decision

The age to start claiming Social Security is a deeply personal choice, and there’s no one-size-fits-all answer. If maximizing monthly income is your primary goal, waiting until 70 might be ideal. This extra income can significantly enhance retirement, especially if savings are limited.

Conversely, maximizing benefits might not be a top priority if you have substantial savings or are open to a modest retirement lifestyle. Claiming as early as 62 can be a valid choice, provided you understand the implications on your monthly income.

Both papers showed that the data lean towards waiting until 70 as the optimal age for Social Security. While the amount being left behind differs in the two studies, the outcome was clear: waiting till age 70 could net you considerably more money. The question of whether you should wait until age 70 requires carefully evaluating your circumstances and priorities. When deciding to claim Social Security early, all factors must be considered, and an informed decision must be made based on your unique circumstances.