Although it's fairly close to most people's full retirement age, there's still a measurable price to be paid for starting these benefits earlier than intended.
When can you retire? It's a question most everyone asks themselves in their working years. And in almost every case, the answer is ultimately a matter of money -- you need a minimum amount of it to live on in retirement. To have it then, of course, you need to earn it now.
The chief challenge: It's not easy to predict future income based on your current earnings and your current rate of return on your savings.
You can, however, at least start developing a retirement budget using broad data like the average Social Security income at a particular age. For this exercise, we'll pick the age of 65.
The cost of claiming too early
For the record, Social Security retirement benefits shouldn't be your only source of retirement income. It's intended to provide only a portion of your income in retirement. Depending on how much you make and save in your working years, the Social Security Administration estimates these benefits will replace around 40% of your pre-retirement income. The rest is up to you.
Just bear in mind you probably won't need to replace 100% of your work-based income once you retire. The rule of thumb is that you'll need to replace 80% of that amount.
You'll also want to remember that you don't qualify for all of your intended Social Security benefits at the age of 65.
You can collect a reduced portion of your eventual benefits as early as 62 years of age, but to collect 100% of your intended monthly payments you must first reach your full retirement age (or FRA) before filing for benefits. The chart below shows FRAs for those born after 1943, and you can see that the FRA is gradually rising toward 67 years of age for anyone born in or after 1960. On the flip side, if you're willing to postpone claiming your benefits, you can collect more. Anyone waiting until they turn 70 to begin collecting their Social Security checks will see payments that are anywhere from 24% to 32% bigger than those they'd collect at their official FRA.
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Whatever the case, the average monthly Social Security payment being made to 65-year-olds in 2024 is $1,505. That's $18,060 per year.
The figure could have been smaller, by the way. The average payment for anyone claiming benefits at the earliest possible age, 62, is a little less than $1,300. At the other end of the spectrum, delaying Social Security retirement benefits to the age of 70 pushes these average monthly payments up to $1,963. The number for 65-year-olds is also markedly less than the overall average of $1,709 per month.
Claiming benefits early can be costly.
Plan beyond Social Security
If you've only been mulling the idea of claiming benefits at 65 years age -- or at any point before reaching your FRA -- these numbers above might just lead you to change your mind. A couple-hundred dollars per month (if not more) is no small amount for the average household, after all.
That being said, don't get so caught up in the search for ways to maximize your eventual Social Security benefits that you forget to save on your own. If you do it consistently and invest wisely for growth, your own nest egg will likely be capable of generating just as much if not more income for you in retirement than Social Security ever could.
To this end, here's another rule of thumb that might help you better plan for your retirement: Saving just 15% of your income for the entirety of your wage-earning career should allow you to maintain your standard of living in retirement.
This math of course assumes you'll work between 30 and 35 years, and will then retire in your 60s. It also assumes you'll invest wisely, achieving growth that measurably outpaces the impact of inflation. You may also need to adjust the amount of your annual contribution if you earned considerably more later in life than you did when you were younger, or vice versa. Again, it's just a starting point.
The ultimate goal is still the same, though. That is, save so much and grow your retirement fund so well that you don't even have to worry about how big or little your Social Security check is when you become eligible to claim benefits.
FAQs
In December 2022, the average Social Security benefit for retired workers was nearly $1,505. This average has probably risen due to Social Security COLAs and higher average earnings.
What is the average Social Security benefit for a 65 year old? ›
Whatever the case, the average monthly Social Security payment being made to 65-year-olds in 2024 is $1,505. That's $18,060 per year. The figure could have been smaller, by the way. The average payment for anyone claiming benefits at the earliest possible age, 62, is a little less than $1,300.
How do I get the $16728 Social Security bonus? ›
There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
At what age is Social Security no longer taxed? ›
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
What is the minimum Social Security benefit at age 65? ›
Social Security's special minimum benefit pays at least $49.40 per month in 2023 and $50.90 in 2024. Social Security's special minimum benefit tops out at $1,033.50 per month in 2023 and $1,066.50 in 2024. You'll receive 100% of the benefit if you file at full retirement age or later.
How much Social Security will I get at age 65 if I make 100k a year? ›
If your pay at retirement will be $100,000, your benefits will start at $2,026 each month, which equals $24,315 per year. And if your pay at retirement will be $125,000, your monthly benefits at the outset will be $2,407 for $28,889 yearly.
What is the average Social Security benefit per month at age 66? ›
According to recently released data from the SSA's Office of the Actuary, just over 590,000 retired-worker beneficiaries were receiving $1,298.26 per month at age 62, as of December 2023. That compares to about 2.11 million aged 66 retired-worker beneficiaries who were taking home $1,739.92 per month.
Can you get $3,000 a month in Social Security? ›
For example, if you get $36,000 a year ($3,000 a month) from Social Security and have no other income, your combined income is $36,000 divided by 2, or $18,000. None of your benefits are taxable if your income is below $25,000 for a single filer or $32,000 for joint filers.
What is the 10 year rule for Social Security? ›
For starters, you must have been married for 10 or more years and you can't be remarried. To receive ex-spouse benefits you have to be at least 62 years old and your ex-spouse has to be old enough to receive Social Security.
What is the 5 year rule for Social Security? ›
The Social Security five-year rule is the time period in which you can file for an expedited reinstatement after your Social Security disability benefits have been terminated completely due to work.
Social Security survivors benefits are paid to widows, widowers, and dependents of eligible workers. This benefit is particularly important for young families with children.
Can I get a tax refund if my only income is Social Security? ›
You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.
Can a person who has never worked collect Social Security? ›
But even if you never worked and therefore don't have an earnings record, you're not necessarily out of luck. If you're married (or were married) to someone who's entitled to Social Security, you can collect spousal benefits equal to 50% of your husband or wife's benefits at full retirement age.
What is the #1 reason to take Social Security at 62? ›
1. You're Planning Your End-of-Life Care. Your Social Security benefits stop paying at your death, so if you die before collecting benefits, you'll have missed out on benefits entirely.
Do stay at home moms get Social Security? ›
A stay-at-home parent can get a Social Security check just like any other worker. Here's how. In order to qualify for a full Social Security benefit, you have to have worked 40 quarters, which equates to 10 years, earning a minimum of at least $1,640 per quarter.
How much should you expect from Social Security if you make $30,000 a year? ›
Deduct what you'll get from Social Security
The general rule is that Social Security benefits replace about 40% of pre-retirement income. With $30,000 in annual income, that means you could receive an estimated $12,000 per year in Social Security payments, without adjusting for inflation.
How much do you lose if you retire at 65 instead of 66? ›
File at 65 and you lose 13.33 percent. If your full retirement benefit is $1,800 a month, over 20 years that 13.33 percent penalty adds up to a little over $57,585. AARP's Social Security Calculator can give you a sense of the financial impact of claiming benefits at various ages.
Is it better to take Social Security at 62 or 67? ›
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
