Social Security payments are intended to replace about forty percent of a retiree’s pre-retirement income. For many Americans, this will not be enough to maintain a comfortable lifestyle in retirement. There are certain actions that one can take, both during one’s career and as one approaches retirement age, that can increase the size of one’s Social Security payments (and supplement it with additional income).
A person’s monthly Social Security payment can go up and down depending on a number of choices. The most important of these choices is the age at which a person decides to claim their benefits. The standard benefit can be claimed once a person reaches “full retirement age”, or FRA. For people born between 1954 and 1960, this age is sixty-six and a certain number of months; for people born after 1960, the age is sixty-seven.
For every month after one’s FRA that he or she decides not to file for Social Security benefits, that person’s Social Security benefits will increase by a small amount. These increases, however, stop at age seventy, making that age the time at which the highest level of monthly benefits can be achieved. Conversely, a person can also claim their benefits early, starting at age sixty-two. Most financial planners argue against doing this, as it comes with a substantial cut—roughly thirty percent—in a person’s benefits. However, there are some reasons that a retiree might consider it.
Which of these choices, then, will lead to the highest total amount of money paid out? Unfortunately, there is no way to know for certain, because the answer depends on a person’s lifespan. In general, however, if one anticipates living into one’s eighties, the most profitable choice is to wait until age seventy to claim benefits, rather than to claim them early. While most people have relatively little control over their own lifespans, certain factors can influence these calculations, including a person’s medical conditions or a track record of longevity in their family.
For most people, however, the objective of Social Security is not to maximize the dollar value extracted before their deaths but to generally ensure a comfortable retirement. To assist with this, one should also consider saving through retirement funds such as a 401(k) or a Roth IRA, which are tax-free and can help to supplement monthly Social Security payments.
Trevor Filseth is a current and foreign affairs writer for The National Interest.