But do understand that one can still live relatively well during their golden years if they become eligible for the absolute maximum monthly payout, which currently stands at $3,895.
Difficult to Land Max Benefits
The bad news is that only a small number of retirees will actually qualify for such benefits. For most folks out there, they can expect to receive anywhere from $1,000 to $2,000 per month—as the average monthly benefits for retirees collecting the benefits is about $1,560.
“Most people who claim Social Security this year won’t be eligible for the maximum benefit,” the Motley Fool, a financial and investing advice company, recently wrote.
“In fact, the maximum benefit is really hard to get, no matter when you’re set to retire. … Most people don’t earn enough to qualify for the maximum benefit. And seventy is hardly the most popular age to sign up for Social Security. Those who can snag $3,895 a month this year are therefore in the minority,” it continued.
There are, however, steps that one can take to get the most out of their Social Security benefits. Perhaps the most financially prudent action to take is to wait as long as possible—preferably till age seventy, the latest one can do so—before filing.
“Workers planning for their retirement should be aware that retirement benefits depend on age at retirement. If a worker begins receiving benefits before his/her normal (or full) retirement age, the worker will receive a reduced benefit. A worker can choose to retire as early as age sixty-two, but doing so may result in a reduction of as much as 30 percent,” the Social Security Administration (SSA) notes.
“Starting to receive benefits after normal retirement age may result in larger benefits. With delayed retirement credits, a person can receive his or her largest benefit by retiring at age seventy,” it adds.
Not Waiting Around
Despite the chance to land higher benefit payouts just by waiting, it seems as though most Americans are not willing to wait around before collecting.
According to Schroders’ 2021 U.S. Retirement Survey, only 10 percent of non-retired workers aged forty-five and higher plan to wait until age seventy to begin filing for benefits. Meanwhile, 30 percent of respondents plan on taking Social Security between sixty-two and sixty-five and 14 percent between sixty-six and sixty-nine. About half of the respondents are unsure when they will claim Social Security.
“Social Security is the primary source of income for the majority of Americans we surveyed, which is why we were surprised to see so many deciding not to wait until seventy for larger monthly payments; or worse, sacrificing their full benefits by tapping into them early,” says Joel Schiffman, the head of Intermediary Distribution, North America, Schroders, per the American Society of Pension Professionals & Actuaries.
Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.