Why 96% of Americans Claim Social Security Before Age 70

Why 96% of Americans Claim Social Security Before Age 70

Oh, congratulations America! A whopping 96% of us have figured out how to leave money on the Social Security retirement table. What an achievement!
Only 4% of Americans actually wait until age 70 to claim their Social Security benefits, according to the Transamerica Center for Retirement Studies.
The rest of us? Well, we’re apparently too busy enjoying those smaller retirement income checks to worry about maximizing our benefits.

How Is Social Security Calculated?

The Social Security Administration uses a formula so unnecessarily complex it’s almost as if they don’t want you to understand it. They take your 35 highest-earning years (because those other years clearly didn’t matter), adjust them for inflation, and then apply a byzantine formula involving percentages and thresholds that change annually. How delightful!

For 2025, they’ll generously give you:

• 90% of the first $1,226 of your average monthly earnings
• 32% for earnings between $1,226 and $7,391
• A magnificent 15% for anything above $7,391

Because obviously, the more you earned and contributed, the less percentage you deserve back. Perfect logic!

Don’t have 35 years of work history? No problem! They’ll just throw in some zeros to bring down your average. How thoughtful of them.

When Can I Start Collecting Social Security?

You can start collecting Social Security as early as age 62, if you’re eager to receive permanently reduced benefits for the rest of your life. What a bargain!

Your full retirement age (FRA) depends on when you were born, because apparently treating everyone equally would be too straightforward:

• Born between 1943 and 1954? Congratulations, your FRA is 66!
• Born after 1960? Sorry, you’ll have to wait until 67.
• Those born in between get to enjoy delightful fractional ages like “66 and 8 months.”

Because nothing says “well-designed system” like making people retire in the middle of a month. For more details, see
When Can I Start Collecting Social Security?

The Advantages of Delaying Social Security

If you delay claiming Social Security past your full retirement age, you’ll earn delayed retirement credits. For those born in 1943 or later, that’s a whole 8% annual increase! Of course, this assumes you’ll live long enough to collect these enhanced benefits. The government is essentially betting you won’t, which is why they offer this seemingly generous deal in the first place.

Morningstar research suggests delaying benefits maximizes lifetime Social Security income. This brilliant claiming strategy works best if you have other income sources to live on while you wait. Don’t have other income? Well, I guess you should have thought of that before deciding to retire! For more information on
maximizing your benefits, read our detailed guide.

The Disadvantages of Delaying Social Security

Despite the mathematical advantage of waiting, 96% of Americans claim early. Could it be that real life doesn’t always conform to theoretical financial models? Shocking!

You Might Need to Withdraw From Tax-Advantaged Retirement Accounts

Imagine needing to actually use your retirement accounts for retirement! If you retire at 67 but delay Social Security benefits, you’ll need to withdraw more from your investments. This could potentially harm your financial health more than claiming Social Security earlier would. But hey, at least you’ll get those bigger checks later—assuming the market doesn’t crash and deplete your savings first.

You Have a Low Life Expectancy

If you’re not planning on sticking around too long, waiting until 70 to collect Social Security benefits might mean you never see a penny of what you’ve contributed. But don’t worry—the government will happily redistribute your unclaimed benefits to those centenarians who are living it up at 100+. According to estimates, there could be 420,000 of them by 2054. Wonderful news for them, not so much for you.

You Worry Social Security Will Be Weakened or Not Exist

About 40% of Americans worry Social Security might be reduced or disappear. How irrational of them! It’s not like the Social Security Administration itself has stated that by 2033, they’ll only be able to pay 79% of scheduled benefits. Oh wait, they have.

But surely Congress will fix this problem well before then, right? They’ve never been known to procrastinate on addressing major financial issues until the last possible moment. And they certainly wouldn’t let a program that millions of seniors depend on face significant cuts. That would be political suicide! (Which, coincidentally, is exactly what many politicians seem intent on committing.)

How Else Can I Fund My Retirement?

Social Security isn’t designed to be your only retirement income source. Surprise! Those FICA taxes you’ve been paying your entire working life only entitle you to partial support in your golden years.

You could rely on:

• A pension—assuming you’re one of the lucky few who still has one
• Your retirement accounts, which you’ve hopefully been funding aggressively despite stagnant wages
• Part-time work in your 70s and 80s (because nothing says “golden years” like greeting customers at the local big box store!)

Don’t worry about age discrimination, health issues, or skill obsolescence—those are just minor inconveniences on your path to financial security. For more ideas, check out
How Else Can I Fund My Retirement?

In the end, the right Social Security claiming strategy depends entirely on your unique circumstances. Just remember, whatever choice you make, there’s a good chance it will be the wrong one. Happy retirement planning!