Nearly nine decades ago, the Social Security Act was signed into law to forge a financial foundation for America’s aging workers who could no longer provide for themselves. After all this time, Social Security remains a financial pillar for a majority of retirees.

For more than two decades, Gallup has polled retirees and non-retirees every year to gauge how reliant they currently are, or expect to be, on their Social Security check. For retirees, between 80% and 90% count on their Social Security income, in some capacity, to make ends meet. Meanwhile, 76% to 88% of future retirees anticipate needing their Social Security check to cover some portion of their expenses.

In other words, getting as much as possible out of Social Security isn’t a luxury. For most Americans, it’s an absolute necessity to retire comfortably.

But in order to maximize what you’ll receive from America’s top retirement program, you’ll first need to understand the nuts and bolts of how your benefit is calculated. This includes the all-important claiming age, which can wildly swing the payout pendulum when collecting Social Security benefits early (age 62), taking a middle-ground approach (age 67), or exercising patience (age 70).

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The four essentials used to calculate your Social Security check

Though some aspects of Social Security can be confusing, the criteria used by the Social Security Administration (SSA) to calculate your monthly check are easy to understand. In no particular order, these are the four essentials:

• Work history
• Earnings history
• Full retirement age
• Claiming age

These first two factors — your work and earnings history — are inseparable. To calculate your monthly Social Security benefit, the SSA will account for your 35 highest-earning, inflation-adjusted years. This does, indeed, mean that if you earn a higher wage/salary throughout your lifetime, there’s a decent chance you’ll receive a larger Social Security payout during retirement.

However, you’ll be penalized if you don’t have at least 35 years of eligible work history. Regardless of how much you’ve earned in a given year or throughout your lifetime, a $0 will be averaged into your calculation for every year less of 35 worked.

The third essential to this calculation is your full retirement age, which is the age you become eligible to receive 100% of your retired-worker benefit. It’s based entirely on the year you’re born and is thus the only criteria that’s beyond your control.

The fourth variable, and the one responsible for meaningful swings higher or lower in monthly/lifetime Social Security payouts, is your claiming age. Although retired workers have the option of collecting benefits as early as age 62, there’s a financial incentive to be patient. For every year a retired worker waits to claim their benefit, beginning at age 62 and continuing until they reach age 70, their payout can grow by as much as 8%. You can see how this dynamic plays out, depending on your full retirement age, in the table below.

Data source: Social Security Administration.

Collecting benefits at 62, 67, and 70 comes with well-defined advantages and drawbacks

While every age within the traditional claiming-age range of 62 through 70 has its own unique pros and cons, ages 62, 67, and 70 are likely to be particularly popular as initial collecting points for retired workers in the coming years. Let’s briefly examine the advantages and drawbacks of these respective claiming ages.

• Age 62: The most enticing aspect of claiming benefits as early as possible is not having to wait to get your hands on your payout. Additionally, the 2024 Social Security Board of Trustees Report estimates that sweeping benefit cuts of up to 21% may be necessary for retired workers by 2033. Claiming your benefit early might be viewed as a way to front-run any potential payout reduction. On the other hand, early filers can be exposed to penalties, such as a permanent reduction of 25% to 30% in monthly benefits (depending on your full retirement age), as well as benefit withholding by the SSA, which is associated with the retirement earnings test.
• Age 67: The lure of waiting until age 67 to collect your benefit is that it represents the full retirement age for anyone born in or after 1960 (i.e., a majority of today’s workforce). Collecting at your full retirement age results in no monthly payout reduction. On the flipside, if you happen to live well into your 80s, an age 67 claim will most likely result in you leaving a significant amount of lifetime income from Social Security on the table.
• Age 70: The clearest advantage of initially collecting benefits at age 70 is that you’ll be maximizing your monthly benefit from Social Security — anywhere from a 24% to 32% increase from what you’d have received at full retirement age (depending on your birth year). The potential downside is there’s no guarantee you’ll live long enough to also maximize your lifetime payout from the program by passing up eight years of collection eligibility (62 through 69).

With the above being said, let’s ask the all-important question: Is it better to collect Social Security at 62, 67, or 70?

The answer to this question can, at least statistically, be found in a broad-based analysis that was released five years ago.

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One claiming age is far likelier than others to maximize lifetime Social Security income

In 2019, the researchers at United Income released a report (The Retirement Solution Hiding in Plain Sight) that examined which, if any, claiming ages led to a higher probability of maximizing lifetime Social Security income collection — what researchers referred to as making an “optimal” claim.

Utilizing data from the University of Michigan’s Health and Retirement Study, United Income extrapolated the claims of 20,000 retired workers and came to two notable conclusions.

The first, which isn’t a surprise, is that only 4% of the 20,000 retired workers examined had optimized their lifetime benefit from Social Security. Since none of us knows our “expiration” date ahead of time, there’s always going to be some degree of guesswork involved when deciding which age is best to begin collecting a benefit.

To add to this point, we all walk a unique path to get where we are. Everyone’s combination of financial needs, personal health, marital status, tax implications, and so on are going to be different, which means there simply isn’t a one-size-fits-all blueprint for everyone to follow.

The second and arguably more important finding is that actual claims and optimal claims were almost perfect inverses of each other. For instance, 79% of the retired-worker claims analyzed had an initial collection age of 62, 63, or 64. However, only 8% of optimal claims would have occurred from ages 62 through 64.

Comparatively, only a very small percentage of actual retired-worker claims occurred at age 70. However, a jaw-dropping 57% of optimal claims correspond with age 70. Age 67 was the second-likeliest age within the traditional claiming-age range to maximize lifetime income from Social Security, but it was way behind age 70 (about a 10% likelihood, compared to 57% for age 70).

To reiterate, we all have unique journeys. This comprehensive statistical analysis doesn’t mean 100% of all future retirees should wait until age 70 to collect their Social Security check. For a lower-earning spouse who wants to generate household income while their significant other’s benefit grows over time, or for a person with one or more chronic illnesses whose life expectancy might be shortened, an early claim might make perfect sense.

But on a purely statistical basis, United Income’s report does demonstrate a clear benefit associated with being patient. It’s something for future generations of retirees to consider if they expect to rely on Social Security as a needed source of income.

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