The Optimal Age to Claim Social Security Benefits May Surprise You
Key Points
Studies have shown the most optimum age for most people to claim Social Security.
It's much later than most people claim.
Not claiming at the optimum age means many people leave money on the table.
- The $23,760 Social Security bonus most retirees completely overlook ›
You can claim Social Security starting at 62, and that's the most popular age to claim benefits. In fact, 26% of retirees claim then.
It's not the optimum age for most people, though. In fact, the best age to start your Social Security checks may come as a big surprise.
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This is the optimum age to claim Social Security
Although you may be eager to start your benefits as soon as possible, the best age to claim Social Security is actually a full eight years later. Specifically, the data shows 70 is the right choice for the majority of retirees.
Multiple research studies back that up, including one by United Income in 2019 and a more recent study by the National Bureau of Economic Research.
It may seem hard to believe that passing up a full eight years of benefits makes sense. And since 70 is after your full retirement age, waiting so long may seem unnecessary.
But the reality is that you can earn delayed retirement credits after FRA until 70. So every month that you wait beyond age 62 will raise your benefit, either because of these credits or because you avoid early filing penalties that would apply before your FRA.
And you don't just earn more monthly benefits when you wait. Odds are good you'll get more lifetime income from Social Security as well. Since many people live longer now than when the system of early filing penalties and credits was created, it's very common to live long enough to do better than break even for benefits you pass up on. You collect the increased benefit for so many years that your lifetime income ends up significantly higher.
How much higher? The NBER study found that the median loss for 45- to 62-year-olds from choosing a suboptimal claiming time will total around $182,370 in discretionary income they don't collect.
Is claiming at 70 possible for you?
As you can see, there are clear benefits for most people to claim at 70.
Getting more monthly and lifetime income from Social Security can significantly increase your financial security. That's especially true given that Social Security benefits are protected against inflation by periodic cost-of-living adjustments (COLAs) and that benefits last for life.
Of course, to take advantage of this and claim at the optimum time, you need to plan -- which many people don't do as they don't realize the best age to start benefits. You probably won't want to, or won't be able to, work until 70, so make sure there is money in your retirement plans to support yourself.
If you can live off your 401(k), IRA, or other retirement accounts and allow your Social Security to grow until 70, you may end up with a much better retirement with far fewer financial worries.
The $23,760 Social Security bonus most retirees completely overlook
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