Social Security is a crucial program that lifts millions of Americans out of poverty each year. The amount of Social Security benefits that retired workers receive depends on various factors, including their earnings, full retirement age, and claiming age. The most popular claiming age in 2022 was 66, and at this age, retired workers could expect to receive an average monthly benefit of $1,719.85. However, claiming benefits at age 66 may not be the optimal choice, as research suggests that the majority of retirees who waited until age 70 received the highest lifetime benefits.
Social Security benefits are earned through years of work, and the amount retirees receive each month is influenced by several factors. Firstly, higher earnings result in larger benefits, as the Social Security Administration considers the individual’s 35 highest-earning years when calculating the payout. Additionally, the full retirement age, which varies depending on birth year, determines when individuals can receive 100% of their benefit. Lastly, the claiming age is a significant factor, as waiting to claim benefits after reaching full retirement age can result in an increased monthly payout.
Despite age 66 being a popular claiming age due to its midpoint status and disability conversion, research suggests that it may not be the most optimal choice for retirees. Studies show that waiting until age 70 can result in the highest lifetime benefits for the majority of claimants. Only a small percentage of age 66 claimants made an optimal decision, and some may also be subject to the retirement earnings test, which can reduce benefits based on income. It is essential for individuals to carefully consider their claiming decision and weigh the potential impact on their lifetime benefits.