Deciding when to start claiming Social Security benefits is a critical decision for retirees, with significant financial implications. Claiming at different ages (62, 66, or 70) results in varying benefit amounts. The average Social Security benefit increases substantially if you delay claiming, with a 57% increase if you wait until 70 instead of 62. However, the decision is personal and should be based on individual circumstances, including health and financial needs. Using tools like the PIA Calculator on the Social Security Administration’s website can help retirees make informed choices.

Transcript:

Eric, as individuals approach retirement age, one of the biggest questions is when to start claiming Social Security benefits.

There’s an incredible amount of coverage here, and it seems like there’s so many different factors that have to go into it.

So what we wanted to do today is present the actual numbers behind this decision to help all viewers make the best choice for them.

And of course, what we’re talking about is when do you claim: 62, 66, or 70? There are costs and benefits. There are trade-offs.

So please walk us through them with some actual numbers.

Yeah, as you noted, what we want to do is just be as specific as possible with numbers that we’re observing.

And as we recently discussed, Social Security generally isn’t the highest source of income in retirement. That’s retirement benefits, but it matters a lot.

According to SmartAsset, the average American retiree receives $52,723 in retirement income.

And in 96% of cities in this study from SmartAsset, income from retirement accounts, I’m talking 401ks, IRAs, pension, is higher than Social Security income.

Still, the average Social Security income in these cities ranges from $14,000 annually to more than $30,000 per retiree. So that is extremely significant.

And getting your Social Security income right is extremely important.

So Austin, here are the numbers, which are straight from the Social Security Administration themselves.

The average Social Security benefit, if you claim at 62, is $1,298. At 64, it’s $1,460. At 66, which is a big jump here, it’s $1,740. At 68, it’s $1,948. And finally, at 70, it’s $2,038.

So I know I just gave a lot of numbers there. Let’s take a step back and analyze what this means.

In dollar terms, claiming at 70 instead of 62 provides $740 more per month on average. And in percentage terms, you’re collecting 57% more.

So a few important notes here. First is that the average numbers, they’re just that—they’re average. Every situation is unique.

So if you’re debating when to collect Social Security, you’ll want to determine what your PIA is. And that’s your benefit for claiming Social Security at full retirement age, which is currently 67.

And it’s based on your 35 highest income years adjusted for inflation.

Now, I know that all sounds like a mouthful. But if you search PIA Calculator in Bing, you should find tools on the Social Security Administration website.

And this is all to say, if you’re starting to consider when to claim Social Security, taking the time to put your own numbers into a calculator on the Social Security Administration’s website can help you see the exact benefits by age you should be entitled to.

Now, the last numbers I want to present are the claims that average people make. Because when you claim at 62, you get 70% of your full benefits, you get 100% at 67, and 124% at 70.

And if we look at what amount of people actually get to these points, 57% of retirees claim Social Security before they reach the age of 66.

So if you feel in good health, making a plan to extend claiming by a few years can be critical for your retirement. Because again, those numbers earlier, if you’re claiming at 62, we’re talking an average of $1,298 per month.

That jumps all the way to $1,740 just by getting to 66. And you also get those full retirement benefits if you’re born after 1960 by reaching 67.

So Austin, having a plan in place, being able to reach just a few more years can go a long way to helping you fund that retirement of your dreams.

You know, Eric, I love that you’re sharing these specific numbers with individuals that really put some clarity on them.

And the two big takeaways I’m hearing are there is a substantial difference in dollar amount, both relative and absolute, by claiming Social Security early versus waiting until late 65 or even 70.

So a substantial dollar amount that you have to consider.

But also this is a deeply personal decision. This is based on your own situation and your own PIA earnings that you’ve put into these Social Security funds, and also your health and whether or not you’re enjoying your current work.

Maybe if you have a job that you really enjoy and you’re 62, consider working for a few more years to collect that income while you delay claiming your Social Security benefits in order to increase it.

On the flip side, maybe if you’re in failing health or you really do need that money today, you would consider taking it at a lower rate.

But it’s a deeply personal decision and head to that Social Security website and do the calculation yourself to determine what your benefits would be under different scenarios.

 

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