Why retiring at 70 could mean more Social Security benefits than you think

Social security benefits play a key role in retirement planning for many Americans: approximately 51 million retirees receive these benefits each month. For people aged 65 and over, these monthly payments represent around 30% of their income. In October 2024, the monthly average Social security the benefit for a retired worker was $1,924.35. But the amount you actually receive each month depends in part on your age when you start collecting benefits.

Key takeaways

The amount of Social Security benefits depends on several factors, including your age when you start receiving benefits.
Waiting 70 years maximizes your Social Security benefits.
Once you start receiving Social Security benefits, you receive them for the rest of your life.

How are your Social Security benefits calculated?

The Social Security Administration uses four key factors to calculate your benefits:

Work history: You must work at least 35 years to receive the maximum benefits.
Earnings history: The SSA bases its calculations on the average of your indexed monthly earnings for your 35 most profitable years.
Full retirement age: This is the age at which you become eligible for full benefits.
Claim age: This is the age at which you actually start receiving benefits.

The SSA uses your average salary over the 35 years you earned the most money, adjusted for inflation, and applies a formula to that number to arrive at your base benefit.

Your average Social Security benefits at ages 62, 67, and 70

There are three stages to receiving Social Security benefits: 62 is the earliest age you can claim benefits, 67 is the full retirement age for most people, and 70 is the when monthly benefits stop increasing if you delay claiming them beyond full retirement age.

To see how waiting to apply for your benefits may affect your payments, here are the average monthly benefit amounts in each age category, as of December 2023:

Age	Advantage
	All retired workers	Retired men	Retired women
62	$1,379.75	$1,528.62	$1,242.33
67	$1,852.82	$2,061.41	$1,650.52
70	$2,021.81	$2,237.87	$1,806.10

The later the better

If you start collecting your Social Security benefits earlier, you will receive less than if you wait until age 70. This difference can be immense. For example, if you were born after 1960, your full retirement age is 67. If you choose to collect benefits at age 62, you will only receive 70% of your primary insurance amount that you would receive at age 67. If you are 70 years old, you will receive 124% of your primary insurance premium.

Let’s say, for example, that your primary insurance amount is $1,000 at age 67. If you start collecting benefits at age 62, you will receive $700. If you wait until age 70, you will receive $1,240.

Cost of living adjustment

Periodically, the Social Security Administration increases its benefit checks with a cost of living adjustment (COLA). For 2025, the COLA adjustment is 2.5%.

The essentials

Social Security benefits make up a significant portion of your retirement income. The longer you wait to start receiving these benefits, the more you may receive. However, it is important to remember that these benefits should not be your only source of income after retirement. Investing in retirement accounts such as 401(k)s and IRAs can also provide the funds needed to help you live comfortably in retirement.