Choosing the age at which to claim Social Security’s Old-Age and Survivors Insurance (OASI) benefits is one of the most consequential decisions related to retirement security anyone will make. Individuals can claim reduced retirement benefits as early as age 62, but the longer one waits to claim (up to age 70), the higher their monthly benefit amount. These adjustments are intended to ensure that an individual with average life expectancy receives approximately the same level of lifetime benefits regardless of when they begin receiving benefits. But these actuarial adjustments were developed decades ago, and significant changes in longevity and interest rates have skewed the adjustments. Today, claiming at a later age nets the average retiree more benefits over their lifetime. Thus, the decision of when to claim Social Security benefits can entail tradeoffs between monthly income, total expected lifetime benefits, longevity protection, and the immediate need or desire for income.
As BPC explained in a 2020 report: “A younger claiming age may yield higher expected lifetime benefits (e.g., because the claimant expects to live a shorter life than average), but an older claiming age may still be optimal because it provides income security if the claimant lives longer than expected and could provide a higher survivor benefit to a spouse. Conversely, for some, claiming later may maximize expected lifetime benefits, but claiming now might be optimal because it meets an urgent financial need that cannot be filled otherwise.”
All four considerations—monthly benefits, lifetime benefits, longevity protection, and immediate needs—are important, but individuals and financial advisors often underappreciate Social Security’s insurance value in favor of focusing on maximizing estimated lifetime benefits. Partially because of this, the distribution of claiming ages skews younger, with many choosing a reduced monthly benefit, and the most common claiming age being the earliest eligibility age of 62.
The distribution of claiming ages differs slightly between women and men, with women claiming slightly earlier, on average, than men—despite the fact that the average 62-year-old woman will live three years longer than the average 62-year-old man.
But Social Security claiming behavior has changed significantly over time. In 1998, 60% of people claimed benefits at age 62, and nearly 80% claimed before reaching their full retirement age (FRA). By 2022, the proportion of people claiming at age 62 dropped by more than half, to 29%, and the proportion claiming before FRA fell to 61%. At the same time, the proportion of people claiming benefits after FRA more than doubled, from 9% in 1998 to 23% in 2022.
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