For most retirees, Social Security does more than provide a monthly check. America’s top retirement systems play a critical role in building the economic foundation for the nation’s aging workforce.
In a 22-year annual survey conducted by the national polling firm Gallup, 80% to 90% of retired respondents said they relied on some form of Social Security income to make ends meet. Additionally, the Center on Budget and Policy Priorities study estimates that more than 16.5 million adults age 65 and older are lifted out of poverty by Social Security each year.
In other words, it’s essential for most retirees to make the most of what they receive from Social Security. A common question is whether setting the age of future retirees at 67, which is becoming increasingly common, is a wise move.
To answer this question, first thoroughly understand how Social Security benefits are calculated, recognize how much the average retired worker is taking home at age 67, and understand how important the claiming age is to this equation. You need to understand what it is. .
These four factors are used to calculate your Social Security check.
Social Security can present many surprises for retirees, including the fact that benefits can be taxed at the federal level and in 10 states based on temporary earnings, which the Social Security Administration ( The “materials” that SSA) uses in its calculations are as follows: Retired worker benefits are simple.
Your work history and income history are closely related. When determining the amount you receive each month, SSA considers your 35 highest earning years, adjusted for inflation. This means that if you earn a higher wage or salary over your lifetime, you’re likely to receive a larger Social Security check when you retire.
However, it is important to note that penalties will be imposed if you do not work for at least 35 years. If the number of years of service is less than 35, the SSA will incorporate an average of $0 into the calculation.
The third factor, and the only one of the four that is completely out of your control, is your full retirement age (sometimes referred to by the SSA as your “normal retirement age”). This is the age at which he is eligible to receive 100% of retiree benefits and is determined entirely by your year of birth.
The fourth and final factor that can have the biggest impact on how much you receive from America’s best retirement plans each month and over your lifetime is your claiming age. An eligible recipient can start paying as early as he is 62, but the program encourages workers to be patient. As shown in the table below, your monthly benefits can increase by up to 8% for each year you wait to claim benefits from age 62 to her age 69.
year of birth | 62 years old | 63 years old | 64 years old | 65 years old | 66 years old | 67 years old | 68 years old | 69 years old | 70 years old |
1943-1954 | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% | 132% |
1955 | 74.2% | 79.2% | 85.6% | 92.2% | 98.9% | 106.7% | 114.7% | 122.7% | 130.7% |
1956 | 73.3% | 78.3% | 84.4% | 91.1% | 97.8% | 105.3% | 113.3% | 121.3% | 129.3% |
1957 | 72.5% | 77.5% | 83.3% | 90% | 96.7% | 104% | 112% | 120% | 128% |
1958 | 71.7% | 76.7% | 82.2% | 88.9% | 95.6% | 102.7% | 110.7% | 118.7% | 126.7% |
1959 | 70.8% | 75.8% | 81.1% | 87.8% | 94.4% | 101.3% | 109.3% | 117.3% | 125.3% |
Since 1960 | 70% | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% |
What is the average Social Security benefit for a 67-year-old?
Based solely on the percentages listed in the table above, you can find out how much your monthly benefit amount will vary depending on your claiming age. Those who file early can have their Social Security checks permanently reduced by up to 30% each month, but most patient retirees who claim benefits at age 70 receive much more than they would receive.24 You can expect a pay increase of between % and 32%. At full retirement age.
You can also see why age 67 is such an important filing age, especially for future retirees. Anyone born after 1960 is guaranteed to receive 100% of their retired worker benefits if they apply when they turn 67. Let’s take a closer look at how much the average retired worker can expect to receive at this age.
The average benefit for a 67-year-old retired worker was $1,883.50 in December 2023, or about $22,602 annually, according to data recently released by SSA’s Office of Accountants. Please note that SSA data is based on: Year This information is for the recipient as of December of this year and does not necessarily indicate the age of the claimant.
Still, this is 45% more than the average 62-year-old recipient received in December, and nearly 8% less than the average 70-year-old retired worker.
As mentioned earlier, age 67 is likely to become increasingly popular given that it is the perfect retirement age for much of today’s workforce. Waiting five years after qualifying to ensure she receives 100% of her retirement benefits could be an interesting proposition for many future retirees.
Social Security’s disability equivalent is another reason why the total number of claims for 67-year-olds will increase in the coming years. When a disabled worker reaches full retirement age, the SSA automatically converts them into retiree benefits. The full retirement age for someone born after 1960 is 67, so the disability conversion aspect of this program will result in higher claims at this age.
What’s popular isn’t always the best choice
The most important question is: Will claiming at age 67 help retirees maximize the amount they receive from Social Security during their lifetime?
The concrete answer is that we don’t know. The only way to be sure that our claim decision is the correct one is to know the “departure” date in advance. None of us know this. Therefore, a certain amount of guesswork is always required, taking into account financial needs, marital status, personal health, etc.
Based on the above, after thorough investigation, have This was done within the traditional filing age range (62 to 70 years). Researchers have found that what’s popular isn’t always the best choice.
Five years ago, researchers at United Income, an online financial planning company, conducted a study that examined the claims decisions of 20,000 retired workers using data from the University of Michigan’s Health and Retirement Study. Announced. The idea was to extrapolate these claims to determine how many retirees made optimal decisions, that is, the decisions that produced the highest outcomes. lifetime income.
What United Income discovered was that the actual and optimal charges were almost completely reversed. Although most retired workers began receiving payments before reaching full retirement age, the overwhelming majority of optimal claims occurred after full retirement age.
Among traditional claims, age 67 had the second highest proportion of optimal claims (approximately 10%). Comparing this to 62, 63, and 64 years old, Combined Only 8% of all optimal claims. However, at the age of 67, very far It’s the second-highest age after age 70, and for a whopping 57% of the 20,000 retired workers surveyed, age 70 was the highest lifetime income earner.
While there is no doubt that claiming at age 67 makes sense for some future retirees, United Income’s research shows that waiting even longer before claiming benefits may be a wiser and more advantageous decision. It’s a pretty clear indication that there is a possibility.