Optimal Social Security Retirement Age: Insights from Statistics

When considering the optimal age to begin collecting Social Security retirement benefits, the Social Security Administration (SSA) frequently receives this question. Their response emphasizes that there isn’t a single “best age” for everyone—it’s a personal decision.

While this is true, statistics suggest there is an optimal age for maximizing Social Security benefits for most Americans. The earliest age to start collecting benefits is 62, but there’s a catch: SSA imposes an early retirement penalty, reducing benefits by a fraction for each month before reaching full retirement age (FRA), which is 67 for those born in 1960 or later. This penalty can result in a 30% reduction in benefits if claimed at 62 compared to waiting until 67.

Conversely, delaying benefits until age 70 can increase monthly payments through delayed retirement credits, resulting in a 24% higher benefit than if claimed at FRA.

Extensive studies, such as one by economists David Altig, Laurence Kotlikoff, and Victor Yifan Ye, suggest that over 99% of Americans who haven’t started benefits should wait beyond age 65, with over 90% advised to wait until age 70. Despite these findings, only a minority wait until 70 due to individual circumstances and preferences.

Factors such as health status and personal priorities play into the decision-making process, alongside financial considerations. While statistically age 70 may yield the highest benefit, personal circumstances often dictate otherwise.

Ultimately, the decision on when to start receiving Social Security benefits is highly individualized, affirming SSA’s stance that the timing should align with personal needs and goals.