Here's the Average Social Security Benefit at Ages 62, 65, and 70

A significant majority of U.S. retirees are claiming Social Security benefits sub-optimally, with nearly 25% claiming at age 62 and only 10% delaying until age 70, despite research indicating over 90% could maximize benefits by waiting. Average monthly benefits significantly increase with delayed claiming, rising from $1,311 at age 62 to $2,068 at age 70 based on June 2024 data, representing a potential 77% increase for those born in 1960 or later. This widespread failure to optimize Social Security claiming strategies suggests a significant behavioral finance trend impacting individual retirement income and potentially broader consumer spending patterns.

Analysis

The article highlights a significant behavioral finance trend where a vast majority of Americans under-optimize their Social Security benefits. Nearly one-quarter of new retired workers claimed benefits at age 62, the earliest possible age, while only one-tenth delayed until age 70, despite a National Bureau of Economic Research study suggesting over 90% could optimize by waiting. This indicates a widespread failure to capitalize on delayed retirement credits.

Delaying Social Security claiming significantly increases monthly payouts. Based on June 2024 data, the average retired worker benefit rises from $1,311 at age 62 to $2,068 at age 70, representing a $757 monthly increase. For individuals born in 1960 or later, claiming at age 70 instead of 62 can boost their monthly benefit by 77%, from 70% to 124% of their Primary Insurance Amount (PIA).

This prevalent sub-optimal claiming behavior suggests many retirees are leaving substantial lifetime income on the table. While individual circumstances vary, the data strongly supports the financial advantage of delaying claims to age 70. This trend has implications for individual retirement security and potentially broader consumer spending patterns in retirement.

Key Decisions for Investors

• Investors should critically evaluate their Social Security claiming strategy, considering the significant financial upside of delaying benefits until age 70.
• Financial advisors should proactively educate clients on the long-term benefits of delayed claiming, using specific data points like the 77% potential increase for those born in 1960 or later.
• Assess individual liquidity needs and health expectations against the potential for higher lifetime income from delayed Social Security, as this decision can materially impact overall retirement portfolio longevity.