There’s a hidden danger in claiming benefits early.
The age you begin taking Social Security benefits is an incredibly important decision, as it will affect your monthly retirement income for the rest of your life. But with so many choices for when to claim, it can be tough to decide on the best age.
Age 62 is the earliest you can begin taking benefits, and it’s also the most popular time to file. Around one-quarter of men and women receive Social Security at age 62, according to 2022 data from the Social Security Administration, while less than 10% of retirees wait until age 70.
While there’s not necessarily a right or wrong age to file for benefits, there’s a hidden danger in filing at age 62. Here’s the average benefit at that age — and the biggest risk with claiming early.
How much does the average retiree collect in benefits?
Your benefit amount will depend on several factors, including the length of your career, your earnings history, and the age you file for benefits.
The Social Security Administration takes an average of your earnings throughout the 35 highest-earning years of your career, runs it through a formula and adjusts it for inflation, and the result is the amount you’ll collect at your full retirement age (FRA) — which is age 67 for everyone born in 1960 or later.
Filing earlier than your FRA will result in smaller payments each month. By claiming as early as possible at age 62, your benefits will be permanently reduced by up to 30%.
That can amount to a hefty reduction, sometimes shrinking your benefits by hundreds of dollars per month. In fact, the average retiree collects just $1,298 per month at age 62, according to 2023 data from the Social Security Administration. Meanwhile, the average benefit at age 70 is around $2,038 per month.
The hidden danger in claiming early
Again, there’s not necessarily a single best age for everyone to take benefits. But many older adults are relying heavily on Social Security in retirement, and with the program on shaky ground, smaller checks can make it far more difficult to retire comfortably.
More than 40% of baby boomers say that Social Security will be their primary source of income in retirement, a 2023 report from the Transamerica Center for Retirement Studies found. Even more concerning, a whopping 21% of U.S. adults age 50 and older have no other retirement income outside of their benefits, according to a 2023 survey from the Nationwide Retirement Institute.
Social Security also isn’t as reliable as it once was. Benefits have lost around 36% of their buying power since 2000, a 2023 study from advocacy group The Senior Citizens League found. Researchers also revealed that in order to maintain the same buying power as in 2000, current retirees would need an extra $516.70 per month from Social Security.
There’s also a chance that benefit cuts could be looming in the next decade or so. According to the Social Security Administration’s latest estimates, the program’s trust funds are expected to be depleted by 2035. If nothing happens before then, benefits could be slashed by roughly 17%.
What this means for you
All of this is to say that Social Security isn’t as dependable as it was in decades past, yet retirees are still relying heavily on their benefits to make ends meet.
There are still valid reasons to consider claiming early. If you have plenty of savings, for example, the smaller checks may not affect your retirement as much. Or if you’re battling health issues, delaying benefits until 70 may not make much sense if you won’t have several decades to enjoy your retirement.
However, it’s important to consider just how much you’ll be relying on your benefits — not just now, but years from now if Social Security faces cuts or continues to lose buying power. The average retiree collects roughly $740 less per month at age 62 than at age 70, and if Social Security is going to be your main source of income, those reductions could sting.
For many older adults, claiming Social Security at 62 could make it far more difficult to enjoy a comfortable retirement. While there are good reasons to consider claiming early, taking an honest look at your goals and financial situation can help you decide whether it’s the right move for you.
