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Here you can see the average age at which retirees claim social security and the monthly benefit they receive

One of the most important retirement decisions you’ll ever make is when to claim Social Security.

Most retirees can claim their monthly benefits starting at age 62, but waiting to claim results in a larger monthly check from the government. Your benefits generally max out at age 70.

This offers many opportunities for retirees. Many financial decisions often benefit from following the wisdom of the crowd. Aggregating the decisions and estimates of millions into an average can be a better guide to what to do than following one person’s advice.

But if you follow the claiming strategy of the average retiree, you could be worse off in the long run after retirement.

Two social security cards on top of a stack of cash.

Image source: Getty Images.

Here is the average age at which retirees claim Social Security

The average age at which retirees claim Social Security has risen steadily since the beginning of the 21st century. This is largely due to changes in social security laws.

Congress passed new legislation in 1983 that raised the full retirement age in two installments from 65 to 67. The first tranche took place in the early 2000s, when workers born in 1937 or later saw their full retirement age increase, eventually reaching 66. The second tranche is currently coming into effect as employees born in 1955 or later see their retirement age gradually increase to 67. That transition ends in 2027.

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Because full retirement age determines when a person is eligible for their standard benefit, or primary insurance amount, the country saw a significant increase in the average claiming age as workers adjusted to the change in Social Security in the decade from 2004 to 2014. The average In 2004, a retiree applied for benefits at the age of 63 and four months. Ten years later, the average had risen by about a year, and is likely to see another increase as Americans adjust to receiving full retirement benefits at age 67.

Today, the average retiree claims benefits at age 65, according to the Social Security Administration’s most recent data on new retirement benefits to be awarded in 2022.

The two most popular claim ages are 62 (the first year of eligibility) and 66. Less than 10% wait until age 70 to maximize their monthly benefits.

This is the average that new benefit recipients receive

In 2022, the average retirement benefit for new claimants (excluding conversions from disability) was $1,938.75. That translates to a 2024 benefit of $2,174.86 based on the 2023 and 2024 cost-of-living adjustments (COLAs).

However, it is worth pointing out that the average benefit for those who filed at age 65 was lower than the average benefit. The average 65-year-old receiving benefits in 2022 received just $1,874.56 per month. There are a number of explanations for this discrepancy.

First, the amount your monthly check increases each month prior to your full retirement age is less than the increase your benefit will receive if you delay past full retirement age. You will receive an additional 5/12 of 1% to 5/9 of 1% of your full retirement benefits for each month you get closer to your full retirement age. If you wait beyond full retirement age, you will receive 2/3 of 1% of your standard benefit for each month you delay.

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The second explanation is that, on average, employees with a low income are more likely to claim benefits than employees with a high income. Their primary insurance amount is significantly lower than that of those who wait until age 70. Early claiming makes sense in cases where careers may have been cut short or someone may not have enough personal retirement savings to get by without claiming social security. asked.

Glasses, pen and calculator on form labeled Social Security Benefits.Glasses, pen and calculator on form labeled Social Security Benefits.

Image source: Getty Images.

Do you have to submit an application at the average retirement age?

As mentioned, the wisdom of the crowd can serve as a guide as you chart your own path. Claiming at age 65 makes intuitive sense for many. It has long been seen as the default age for retirement (perhaps a holdover from the original Social Security law). It’s also the age at which you become eligible for Medicare, making it easier for you to leave your job.

But claiming Social Security at age 65 could be a mistake for many retirees, according to hard data and several comprehensive studies.

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If you want to maximize your lifetime Social Security benefits, chances are you’ll do so by waiting until age 70 to sign up. Life expectancy data from the CDC shows that the average person in their 60s will live long enough to receive more benefits during their lifetime by waiting to file for benefits. So unless you have reason to expect that you will have a shorter-than-average lifespan, you will probably reap more benefits by putting it off as long as possible.

A 2019 United Income survey also found that most retirees would maximize their wealth by delaying retirement until age 70. 57% of households would maximize their chances of being able to afford their pension by waiting until age 70 to apply. By comparison: 8% of households would be better off submitting an application before the age of 65.

Please note that retirement planning is highly dependent on personal circumstances. What works for one person may be a bad decision for another. The wisdom of the crowd can only take you so far. You need to determine what works best for you.

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Here is the average age at which retirees claim Social Security and the monthly benefit they receive. originally published by The Motley Fool

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