When it pertains to retirement planning, choosing when to file for Social Security is one of the most significant decisions you will make. Many choose to wait a minimum of a few years before claiming their benefits, even though most people can apply for payments starting at age 62. One of the best financial strategies to avoid making costly financial blunders is to heed the advice of the masses. Is it better to do that right here and start collecting benefits at the typical retirement age, as well as should you create your retirement plan? Think about the typical age at which Americans file for Social Security benefits as well as the monthly benefit amount before making a choice.
The Average Age Has Increased Significantly
Since the turn of the century, the average age at which retired workers file for Social Security has increased significantly. This is because the Social Security statutes were changed, raising the complete retirement age concerning 65 to 66 and subsequently to 67 depending on your birth year. It affected the credit or penalty that recipients got for delaying or filing for benefits early. Your monthly cheque will be less if you begin collecting retirement benefits before reaching full retirement age. The reduction is determined by the distance between you and the full retirement age. Therefore, the benefit reduction for those claiming at age 62 with an FRA of 65 was less than for those having a full retirement age of 66 or 67.
Your monthly payment will be greater if you begin collecting your benefit after reaching full retirement age. Individuals who were born in the year 1943 or later will see an increase of 8% on their paycheck for every year that they wait to reach full retirement age. However, for individuals who were born earlier, that yearly percentage was lower. For instance, if a person born in 1932 waits until age 70, they will only receive 125% of their primary insurance amount, even though their full retirement age is 65. In contrast, a person born in 1960 or later who delays until age 70 can receive 124% of their primary insurance amount, with a FRA of 67.
Claiming For Social Security Payments
It can be summarised as follows: over the last 25 years, there has been a significant increase in the spectrum of potential benefits associated with filing early as opposed to waiting. Retirees have so naturally raised the age when they claim for Social Security payments and are paid more for every year that they postpone. The SSA released a bulletin in 1998 that said that the typical retired worker claimed benefits at age 63.4 for men and 63.5 for women. It rose to 64.7 for males and 64.6 for women in 2018. Following disability conversions, the average age of an individual getting a new retirement benefit award from Social Security in 2022 was 64.9 for women and 65.0 for men, according to statistics from the most recent Social Security statistical supplement.
In 2022, a new retiree received an average benefit of $1,938.75. In 2024, the retirees will receive an average cheque of around $2,174.86, which will be adjusted for the cost of living in 2023 & 2024. It may surprise you to learn that people who filed claims at age 65 continued to get less in benefits than the average fresh award in 2022, even though you would anticipate anyone who filed claims earlier than normal to receive a benefit that is below average. In 2022, a 65-year-old who applied for retirement benefits from Social Security for the first time on average received a $1,874.56 monthly cheque.