Most seniors will rely on Social Security to some extent during retirement. A staggering 88% of current retirees rely on their benefits, according to a 2024 Gallup poll, with 60% of that group saying Social Security is a major source of income.
Some retirees even rely on their benefits as their only source of income. Even if you have a solid nest egg, there is a chance that your savings will eventually run out if you live long.
The more you can do now to maximize your benefits, the better off you’ll be in the future. No matter what your financial situation looks like, there’s one simple strategy that can help the average retiree boost their benefits by more than $700 per month.
The age at which you apply for your pension can make or break your retirement
Determining at what age you will receive your state pension is one of the most important decisions you will ever make about your pension.
Your claiming age directly affects how much you receive each month, and generally your benefit amount is set once you file — except for annual cost-of-living adjustments. In other words, this choice has a lifelong impact on your finances.
You can retire as early as age 62. If you wait until your full retirement age, which is 67 for anyone born in 1960 or later, you will receive 100% of your benefit based on your work history. If you wait even longer, until age 70, you will receive your full benefit plus a bonus amount each month.
These adjustments are generally permanent and can be significant. Claim at age 62 and your benefits will be reduced by up to 30% per month. Wait until you are 70 and you will receive a bonus of at least 24% per month on top of your full payments.
For the average worker, that adds up to hundreds of dollars a month. According to 2023 data from the Social Security Administration, the average retired worker at age 62 will receive about $1,298 a month in benefits. By age 70, however, the average benefit is about $2,038 a month, a difference of $740 a month.
Postponing benefits is not always the best move
Waiting until you’re 70 can be a great move if you’re short on savings or simply want to maximise your retirement income. However, it’s not the right strategy for everyone and there are good reasons to consider claiming earlier.
First, it may be wise to file a claim sooner if you have reason to believe that you will not live past the age of 70. While it may not be the most pleasant topic to think about, if you have health issues, filing a claim sooner could give you more time to receive your benefits than if you delay.
Filing early can also be a strategic decision if your spouse is also eligible for retirement benefits. One of you may choose to file early to generate some extra income during your retirement, while the other delays filing to earn larger checks. This approach can help you retire early without sacrificing as much income.
Deciding when to file for Social Security is a highly personal decision that depends on a variety of factors, but if your primary goal is to maximize your income, delaying benefits is one of the best steps you can take. Waiting a few years to file increases the average retiree’s income by hundreds of dollars per month, which can set you up for a much more comfortable retirement.
The $22,924 Social Security Bonus That Most Retirees Completely Overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” can help boost your retirement income. For example, one easy trick could save you $22,924 more… every year! Once you learn how to maximize your Social Security benefits, we think you can retire confidently with the peace of mind we all seek. Click here to learn how to learn more about these strategies.
View the “Secrets of Social Security” ›
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Social Security: The Average Retiree Can Earn $740 More Per Month With This Simple Move was originally published by The Motley Fool
