This Is the Average Social Security Benefit at Age 65
Key Points
There is a gap of more than $300 between the average benefits of men and women at age 65.
Your Social Security benefit is based on the 35 years when your earnings were the highest.
If your full retirement age is 67, claiming at 65 will reduce your benefit by 13.33%.
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The role Social Security plays in someone's retirement finances varies widely. Some rely on it for all their income; some rely on it for the majority of their expenses; and for others, it's just a nice-to-have bonus because they have enough money coming in from other sources.
The role Social Security plays also varies widely because possible benefit amounts vary widely, currently between $53.50 and $5,251.
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However, the average benefit amount can help put into perspective the more typical benefit. As of the start of this year, the average monthly benefit for someone age 65 was $1,607.27. The average benefit for men was higher at $1,772.00, and the average for women was a bit lower at $1,457.40.
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How Social Security benefits are calculated
Your Social Security benefit is based on the 35 years when your income was the highest. It's a three-step process:
- Convert each year's earnings to today's dollar value (called "indexing").
- Calculate your average indexed monthly earnings (AIME) by taking the total of your indexed earnings and dividing it by 420 (the number of months in 35 years).
- Apply a formula using bend points to your AIME to get your base benefit, called your primary insurance amount.
If you have less than 35 years of earnings under your belt, the Social Security Administration (SSA) will put a zero for each missing year of the 35.
How claiming at 65 affects your monthly benefit
With Social Security, your full retirement age is when you're eligible to receive your primary insurance amount (PIA). However, you can claim before then, reducing your benefit, or after then, increasing your benefit.
For each month you claim benefits before your full retirement age, your benefits are reduced by 5/9 of 1%, up to 36 months. Each additional month after 36 will reduce them by 5/12 of 1%. For each month you delay benefits past your full retirement age, they're increased by 2/3 of 1% monthly (8% annually).
For anyone born in 1960 or later, the current full retirement age is 67. So, if you were to claim benefits at 65, your benefits would be reduced by 13.33%. That means, if your PIA is $2,000, claiming at 65 would reduce it to $1,733.40.
Everyone's financial situation is different, but if you have enough income from other sources, such as a 401(k), IRA, or investments, it's generally a good idea to wait until your full retirement age to claim benefits to avoid the reduction.
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