Getting the most out of Social Security is key to enjoying a comfortable retirement. For many, it’s a big part of their income.
In fact, around half of households with someone age 65 or older rely on Social Security for 50% or more of their income, according to data from the Social Security Administration (SSA).
To get the maximum possible Social Security benefit, you need a long, high-paying career and should delay claiming benefits until age 70.
But even for high earners, the age you start claiming has a huge impact on how much you’ll receive each month. Let’s break down what the difference looks like at 62, 66, 67, and 70.
How to Maximize Your Social Security Benefits?
The amount you receive from Social Security mainly depends on two factors: how much you earned during your career and when you decide to start taking benefits. The more you earned and the longer you wait to claim, the bigger your monthly check will be.
When the SSA calculates your benefit, they look at your highest-earning 35 years (adjusted for wage inflation) to determine your average monthly earnings (AIME).
From there, they use a formula based on your birth year to figure out your primary insurance amount (PIA), which is the benefit you’ll get at full retirement age.
If you claim earlier than your full retirement age, you get less than your PIA. If you wait until later, you’ll get more.
For high earners, there’s a cap on how much income is subject to Social Security taxes, and only earnings up to that cap count towards your benefit.
This cap is adjusted each year for inflation. If you consistently earn more than the maximum taxable amount, you could be in line for the maximum Social Security benefit.
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The Impact of Claiming Age on Your Benefit
Even if you’re eligible for the maximum benefit, the age at which you claim can make a big difference in your monthly check.
Claiming benefits at 62, the earliest possible age, will result in a significant reduction compared to waiting until 70. But starting early also means getting checks for eight more years. Many people choose to claim at their full retirement age, which is between 66 and 67 for most.
Here’s what the maximum benefit looks like for 2024, depending on when you claim:
| Retirement Age | 62 | 66 | 67 | 70 |
|---|---|---|---|---|
| Max Monthly Benefit | $2,710 | $3,652 | $3,911 | $4,873 |
As you can see, waiting until 70 can mean a much larger monthly income. Someone claiming at 70 could receive up to $58,476 a year, while a 62-year-old would only get $32,520. That’s a huge difference, and it shows the power of waiting to claim.
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Should You Wait Until 70?
If you’re earning enough to max out your Social Security, you’re probably already in good shape for retirement. But even if you can afford to start taking benefits early, it’s worth considering waiting.
Delaying your Social Security benefits provides a risk-free return of 7.4% per year from age 62 to 70. That’s better than the stock market’s historical inflation-adjusted return of 6.8%, and without the risk.
If you’re financially comfortable and don’t need the income right away, waiting can also help you reduce your taxable income in the long run. Plus, it protects you against outliving your savings, since you’ll receive a larger monthly check for the rest of your life.
Studies show that most retirees would benefit from waiting until age 70. In fact, a 2019 analysis found that 57% of retirees would maximize their wealth by waiting, while only 6.5% would benefit from claiming before age 65.
The Bottom Line
Maximizing your Social Security benefits is all about finding the right balance for your personal financial situation. While claiming early may give you access to benefits sooner, delaying could provide a significant boost in your monthly income. For most people, waiting until 70 offers the greatest long-term financial advantage.
And remember, there are also little-known strategies that can help you get even more out of Social Security. So, take the time to explore your options and make sure you’re making the best decision for your future retirement.