Many of today’s working Americans are likely taking Social Security for granted. Every year, America’s top retirement program pulls more than 21 million people out of poverty, including close to 15.4 million adults aged 65 and older. Without Social Security, the elderly poverty rate would be almost four times higher than it is today.
Furthermore, two decades’ worth of annual surveys from national pollster Gallup have found that between 80% and 90% of retirees in any given year rely on their Social Security income to cover at least some portion of their expenses.
In other words, Social Security is vital to the financial well-being of our current and future retired workers. This means it’s imperative for future generations of retirees to get the most they can out of America’s leading retirement program. But in order to do so, retirees first need to understand how their benefit is calculated, as well as how their claiming age can dramatically affect what they’ll receive each month.
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Here’s how your Social Security benefit is calculated
Although there are well over a half-dozen factors that can affect what you’ll get to keep of your Social Security check — Social Security benefits can be taxed at the federal level, as well as in 12 states, depending on your income — there are four bare-bones components the Social Security Administration (SSA) uses to determine how much you’ll receive each month:
The first two components are intertwined. The SSA will use your 35 highest-earning, inflation-adjusted years when calculating your retired worker benefit. This means if you earn more, you’ll likely receive a larger payout during retirement. Furthermore, for every year less than 35 worked, the SSA will average a $0 into your calculation, which can meaningfully reduce your monthly benefit.
The third element on the list, full retirement age, is completely out of your control. It’s the age you become eligible to receive 100% of your retired-worker benefit, and it’s determined by your birth year. For anyone born in 1960 or later (that’s most of today’s labor force), full retirement age is 67.
The fourth and final factor, and the one that can really pump up your monthly benefit or shrink it considerably, is your claiming age. Workers who’ve earned the requisite 40 lifetime credits can begin receiving a Social Security check as early as age 62. However, patience is encouraged. For every year a worker waits, post-eligibility, to receive their benefit, their monthly payout can grow by up to 8%, through age 69, as shown in the table below.
| Birth Year | Age 62 | Age 63 | Age 64 | Age 65 | Age 66 | Age 67 | Age 68 | Age 69 | Age 70 |
| 1943-1954 | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% | 132% |
| 1955 | 74.2% | 79.2% | 85.6% | 92.2% | 98.9% | 106.7% | 114.7% | 122.7% | 130.7% |
| 1956 | 73.3% | 78.3% | 84.4% | 91.1% | 97.8% | 105.3% | 113.3% | 121.3% | 129.3% |
| 1957 | 72.5% | 77.5% | 83.3% | 90% | 96.7% | 104% | 112% | 120% | 128% |
| 1958 | 71.7% | 76.7% | 82.2% | 88.9% | 95.6% | 102.7% | 110.7% | 118.7% | 126.7% |
| 1959 | 70.8% | 75.8% | 81.1% | 87.8% | 94.4% | 101.3% | 109.3% | 117.3% | 125.3% |
| 1960 or later | 70% | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% |
Data source: Social Security Administration. Table by author.
What’s the average Social Security benefit at age 64?
There are big dollar figures on the line depending on when you choose to take your Social Security benefit.
For instance, future generations of retirees who want their money as soon as possible (age 62) will be accepting a permanent monthly reduction of as much as 30%, compared to what they’d have been due at age 67 (their full retirement age). Based on the average retired-worker benefit of $1,843.96 in October 2023, we’re talking about a greater than $550-per-month haircut in benefits.
Meanwhile, an age 70 claimant born in or after 1960 can receive up to 24% more than what they’d be due at their full retirement age, or almost $443 more per month, based on the current average retired-worker payout. This eight-year claiming age difference would result in a nearly $1,000-per-month benefit gap.
This trade-off between getting a reduced payment sooner or having to wait for a beefier monthly payout is what encourages some retirees to take a middle-ground approach. Even though age 64 was the second least popular of the nine claiming ages from 62 through 70 in 2022, it certainly fits the mold of an age that middle-ground applicants would consider.
Just how much is the average retired-worker beneficiary taking home at age 64? According to data from the SSA, the 1,034,598 retired workers receiving a benefit at this age, as of December 2022, were bringing home $1,411.50 per month, or $16,938 on an annualized run-rate basis. While this is nearly 10% higher than what the average retired worker received at age 62, it’s 23.5% below the average benefit check at…
Read More: Here’s the Average Social Security Benefit at Age 64