It keeps millions of older Americans out of poverty and provides a significant portion of income for most retirees.
Social Security is a critical program that provides benefits to more than 60 million people in the United States
According to the Social Security Administration, benefits represent about 30% of the income of the elderly, and for over 10% of elderly beneficiaries, it provides 90% or more of their income. Therefore, it is essential to be knowledgeable about Social Security to make informed decisions that maximize its benefits.
Individuals can start collecting their Social Security benefits as early as 62 or as late as 70, and the timing of when to start has a significant impact on the amount of the checks. Each person has a full retirement age, which ranges between 66 and 67 depending on their birth year, at which they can collect full benefits based on their earnings history. If individuals start collecting early, their checks will be smaller but more frequent than those who start later.
If individuals delay collecting benefits, their benefits will increase by about 8% for each year beyond the full retirement age that they wait, up to age 70.
Social Security benefits are critical for many, they are not as generous as some may expect
On average, they provide about 40% of preretirement income, with the average monthly retirement benefit in March 2023 being $1,833 or about $22,000 per year. However, delaying the collection of Social Security benefits can increase the benefit amount. A table shows how much of the full benefit amount individuals can expect to receive, depending on when they start collecting benefits.
The decision of when to start collecting Social Security benefits is crucial and depends on each person’s circumstances and expected longevity. While some people may need the income earlier due to health setbacks or job loss, others may benefit from waiting. To maximize Social Security benefits, individuals need to consider their own situation and explore various strategies.
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