Statistically, This Is the Worst Age to Claim Social Security Benefits if You Want to Maximize Your Lifetime Income

Core Insights - The average monthly benefit for retired workers has surpassed $2,000 for the first time in Social Security's history, with a notable annual cost-of-living adjustment (COLA) of at least 2.5% for five consecutive years, a feat not seen in nearly three decades [1][2] Summary by Sections Social Security Importance - A significant majority of retirees, approximately 80% to 90%, rely on Social Security income to meet their expenses, indicating that it is a necessity for most beneficiaries [2] Benefit Calculation Factors - The calculation of monthly Social Security benefits is based on four key elements: earnings history, work history, full retirement age, and claiming age [5][7] - The Social Security Administration (SSA) considers the 35 highest-earning, inflation-adjusted years for calculating benefits, penalizing those with fewer than 35 years of qualifying work history [6][5] - The full retirement age, which is 67 for those born in or after 1960, is the age at which beneficiaries can collect 100% of their benefits [8] Claiming Age Analysis - Claiming benefits as early as age 62 can lead to permanent monthly reductions of up to 25% to 30%, with only 8% of claims made at ages 62, 63, and 64 being optimal [17][18] - Conversely, waiting until age 70 to claim benefits can significantly increase monthly payouts, with 57% of claims at that age being optimal according to the analysis [19] Research Findings - A study analyzing 20,000 retired workers found that only 4% made optimal claims, highlighting a clear gap between actual and optimal claiming decisions [12][15] - The analysis revealed that 79% of retirees claimed benefits between ages 62 and 64, but this age range offered the lowest probability of an optimal claim [17][18] - Unique personal factors, such as health and life expectancy, can influence the decision on when to claim benefits, but generally, waiting tends to yield higher lifetime income from Social Security [20][21]