Here’s How to Squeeze an Extra 24% Out of Social Security | Smart Change: Personal Finance


(Katee Brockman)

Social Security benefits can go a long way toward helping you enjoy a more comfortable retirement, so it’s wise to make the most of them.

While your base benefit amount is determined by your earnings record throughout your career, there’s another factor that can increase your benefit amount by up to 24% — and you have complete control over it.

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How your age affects your benefit amount

Other than your earnings record, the age you file for Social Security will have the biggest impact on the amount you receive each month.

To collect the full benefit amount you’re entitled to, you’ll need to wait until your full retirement age (FRA) to begin claiming. For those born in 1960 or later, your FRA is age 67.

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If you claim before your FRA (as early as age 62), your benefits will be reduced by up to 30%. But if you delay benefits until age 70, you will receive your full benefit amount plus a 24% bonus each month.

Keep in mind, too, that these adjustments are permanent. So if you delay benefits, that means you’ll continue earning these larger checks for the rest of your life — regardless of how long you live.

Is delaying benefits right for you?

If your savings are falling short or you simply want to earn as much as possible each month in retirement, delaying benefits might be the right move. Depending on your benefit amount, waiting to file could result in collecting hundreds of dollars more each month.

The average benefit amount in 2022 is $1,657 per month, according to the Social Security Administration. Say, for example, you have an FRA of 67 years old, and you claim at age 62. In that scenario, your benefits would be reduced by 30%, leaving you with around $1,160 per month.

On the other hand, if you were to wait until age 70 to file, you’d receive your full benefit amount plus an extra 24%, or $2,055 per month — that’s nearly $900 more per month compared to if you’d claimed at age 62.

When it might be better to claim early

Delaying Social Security is one of the most effective ways to increase the size of your monthly payments, but it’s not the right move for everyone.

If you lose your job or are otherwise forced into an early retirement, for example, you may be better off claiming benefits early. While you don’t have to file for Social Security as soon as you retire, you could end up draining your savings too quickly if you retire early but choose to delay benefits.

Also, if you have reason to believe you may live a shorter-than-average lifespan, claiming early could be the right move. If you don’t end up spending decades in retirement, you could actually receive more money over a lifetime if you claim earlier.

The age you begin claiming Social Security benefits is a personal decision that will depend on your unique situation. By understanding the pros and cons of both options, it will be easier to decide whether claiming early or delaying benefits is right for you.

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