The Social Security Administration (SSA) has released data on the average monthly benefit for retired workers at different ages. These figures can help individuals assess how their own Social Security checks compare to others.
The size of your monthly payout is determined by several factors. Firstly, it depends on how many years you worked and your income during those years. Additionally, your full retirement age (FRA) and the age at which you choose to start receiving benefits also play a role.
The SSA provides benefits to various groups, including spouses, disabled individuals, and minor children of deceased workers. However, for the purpose of this article, we will focus on retired-worker benefits, which accounted for about 74% of the SSA’s beneficiaries as of December 2022.
At that time, the average monthly benefit for retired-worker beneficiaries was as follows:
– $1,274.87 for 62-year-olds
– $1,719.85 for 66-year-olds
– $1,946.34 for 71-year-olds
Your FRA is the age at which you become eligible to receive your full Social Security retirement benefit, and it is based on your date of birth. The SSA provides a retirement age calculator to help individuals determine their FRA. It’s important to note that you can choose to start collecting your benefit before or after your FRA, but this decision will impact the size of your monthly check. Filing early results in a reduced payout, which is permanent. For example, if you start collecting benefits at age 62 in 2023, your benefit will be approximately 30% lower than if you wait until your FRA of 67. Waiting until age 70 to claim your benefit can lead to even higher monthly payments.
The amount of your benefit is also influenced by your previous income. To be eligible for retirement benefits, you must be 62 or older and have paid Social Security taxes for at least 10 years. The SSA calculates your payout based on the average income earned during your 35 highest-earning years, adjusted for wage inflation. If you plan to retire early but haven’t worked for 35 years, it’s worth reconsidering, as any years without work are counted as an income of zero, significantly reducing your eligible benefit amount.
Social Security is designed to replace a portion of your average income over 35 years. The percentage of pre-retirement income that low, medium, and high earners can expect to receive is approximately 75%, 40%, and 27%, respectively. However, there is a maximum amount that can be received.
While waiting to collect benefits results in a larger check, there are valid reasons to start collecting earlier. Some individuals may need the money for day-to-day expenses or to pay off high-interest debt. Health issues or a shorter life expectancy can also influence the decision. In fact, many people start collecting retirement benefits before reaching their FRA. In 2022, the average age at which retirees began receiving benefits was 65.2 for men and 65.1 for women. Among male benefit recipients, 49.3% started their benefits before their FRA, while the proportion was even higher for female benefit recipients at 51.8%.
If you haven’t claimed your retirement benefit yet, it’s advisable to consult with a financial adviser to determine whether filing before or after your FRA would maximize your benefit.
Please note that this article provides information only and should not be considered as financial advice.
