Social Security, despite all its issues — and the real concerns about its future, barring action by Congress — has proven to be a hugely important program for older Americans. The average current retiree gets $1,411 per month from the program, or about one-third of his or her income.
Furthermore, it’s also quite flexible, allowing seniors to take a benefit as early as age 62 or as late as 70, with the age you file determining the size of your monthly benefit. In general, the total payout over the length of your life should be fairly consistent regardless of when you file, but as Americans live longer, that’s starting to change.
And that, along with other things, can complicate the decision of what age is best for you individually. For some people, filing at 62 absolutely makes the most sense, while for others, waiting until age 70 is the best call. In general, the numbers show that the average American would do best to file at age 66.
Let’s take a look at three of the biggest reasons that 66 is generally the best age to file for Social Security.
1. It’s the best balance between money and time
A big part of the allure behind taking Social Security early is that it could allow you to retire early, or at least cut back on how much you work and gain a few years of extra leisure while working part-time. However, there’s a risk here: Taking Social Security before your full retirement age (between 66 and 67, depending on your birth year) results in not only a smaller monthly benefit, but also a cap on how much you can earn before Social Security starts cutting your benefit even more. In general, there aren’t many situations that would justify taking Social Security early if you plan to keep working full-time, particularly if it’s before you’d become eligible for Medicare at age 65.
Delaying all the way to age 70 would result in the biggest monthly check, but frankly, most of us won’t be able to afford to put off Social Security that long without continuing to work. And while a lot of Americans will be forced to work until age 70 or even longer, you shouldn’t feel like you’re forced to if you absolutely don’t have to.
And that makes 66 — or more accurately between 66 and 67, depending on your full retirement age — the ideal age to start Social Security.
Not only will it result in a substantially bigger monthly check versus filing at 62, but you’ll still be relatively young. The average 66-year-old American will live nearly 20 more years, and those bigger benefit checks can make a significant difference in quality of life.
Waiting until age 66 would also result in thousands of dollars more in benefits versus filing at 62, if you live an average life expectancy. And since those checks would be 30% bigger, the benefit of waiting will be even more pronounced the older you get. That’s especially important if you end up one of the seniors who count on Social Security for half or more of their income.
2. You haven’t saved enough for retirement
According to Vanguard, the average American with retirement savings has over $103,000 saved. But if we look at median data — the number that sits in the middle of the population — things are a bit dire. According to the 2018 edition of Vanguard’s annual “How America Saves” report, the median 55- to 64-year-old had only $71,105 in their 401(k) in 2017, while the median account for people ages 65 and up held only $64,811.
When it comes to providing potentially decades of income, those are tiny balances. Based on the 4% annual-withdrawal rule, we’re talking about less than $3,000 per year in long-term income. If you don’t have substantially more saved than that, you may need to continue working to age 66 simply to boost your retirement savings balance.
3. It could make a big difference for your spouse
For many of you reading this article, when you take Social Security will have repercussions that affect your spouse, and potentially for years after your time on earth is over. This is especially true if you are the bigger earner and your spouse is likely to outlive you.
A few important statistics: 71% of single retirees count on Social Security for at least half of their income, and 43% of single seniors count on Social Security for a startling 90% of their income. If your spouse is likely to be one of those counting heavily on Social Security after your death, filing at 66 or even later could make a big difference in their quality of life in later years.