As you plan for retirement, it can be useful to estimate your income sources including Social Security payments. The exact amount you’ll receive will depend on several factors, including when you retire and how many years you worked and paid taxes. Looking at the average amounts sent to beneficiaries at different ages might help you evaluate your situation and decide when to apply for Social Security.
To learn how much you’ll receive from Social Security at different times, consider the following:
— How early you can collect benefits.
— The average Social Security benefit by age.
— How Social Security benefits are calculated.
— What COLA means and how it works.
— What is the 2024 COLA?
[READ: How Much You Will Get From Social Security.]
How Early You Can Collect Benefits
The Social Security Administration sets certain ages for retirement, which indicate how much of your benefit you will receive. If you retire at your full retirement age, you can expect to receive your full benefit. The earliest age you’re eligible to start collecting Social Security benefits is 62. However, doing so will mean a reduction in your benefits. If your full retirement age is 66 and you retire at age 62, your benefit amount will be 25% lower. Those who have a full retirement age of 67 and choose to apply at age 62 will receive a 30% deduction in payments.
Your full retirement age depends on your year of birth. Those who were born between 1943 and 1954 have a full retirement age of 66. This gradually increases for individuals with birth dates from 1955 to 1959. Workers born in 1960 or later have a full retirement age of 67.
When you apply for Social Security will depend on your unique situation. “Starting at 62 makes sense for those with chronic health conditions that may lead to a shortened life expectancy,” says Bob Wood, finance professor at the University of South Alabama’s Mitchell College of Business. If you opt to delay claiming benefits past your full retirement age, they will increase by 8% each year until you turn 70. “Few if any fixed investment vehicles are guaranteed to increase 8% per year,” Wood says.
The Average Social Security Benefit by Age
The Social Security Administration releases data to show how much beneficiaries receive every year. The following table depicts the average benefit for individuals at different ages according to a SSA report released at the end of 2022. It notes the age of the beneficiary and lists the average benefit for those who were not affected by early retirement deductions or delayed credits.
| Age | Men | Women |
| 66 | $2,082 | $1,647 |
| 67 | $2,057 | $1,643 |
| 68 | $2,015 | $1,614 |
| 69 | $2,039 | $1,634 |
| 70 | $2,033 | $1,631 |
| 71 | $2,020 | $1,621 |
| 72 | $2,047 | $1,641 |
| 73 | $2,094 | $1,670 |
| 74 | $2,104 | $1,667 |
| 75 | $2,152 | $1,686 |
| 76 | $2,116 | $1,656 |
| 77 | $2,131 | $1,660 |
| 78 | $2,153 | $1,668 |
| 79 | $2,175 | $1,660 |
| 80 | $2,176 | $1,652 |
| 81 | $2,151 | $1,640 |
| 82 | $2,094 | $1,609 |
| 83 | $2,063 | $1,591 |
| 84 | $2,012 | $1,563 |
| 85 | $1,945 | $1,539 |
| 86 | $1,909 | $1,534 |
| 87 | $1,558 | $1,371 |
| 88 | $1,523 | $1,362 |
| 89 | $1,527 | $1,366 |
| 90 or older | $1,490 | $1,384 |
The following table lists the average benefit by age for men and women who qualified for delayed credits. It is based on 2022 data from the Social Security Administration.
| Age | Men | Women |
| 66 | $2,469 | $1,966 |
| 67 | $2,358 | $1,906 |
| 68 | $2,384 | $1,935 |
| 69 | $2,476 | $2,005 |
| 70 | $2,830 | $2,296 |
| 71 | $2,809 | $2,283 |
| 72 | $2,856 | $2,303 |
| 73 | $2,875 | $2,296 |
| 74 | $2,801 | $2,230 |
| 75 | $2,802 | $2,216 |
| 76 | $2,675 | $2,120 |
| 77 | $2,623 | $2,080 |
| 78 | $2,591 | $2,041 |
| 79 | $2,489 | $1,968 |
| 80 | $2,405 | $1,921 |
| 81 | $2,254 | $1,836 |
| 82 | $2,115 | $1,771 |
| 83 | $2,006 | $1,711 |
| 84 | $1,886 | $1,656 |
| 85 | $1,732 | $1,604 |
| 86 | $1,697 | $1,569 |
| 87 | $2,092 | $1,699 |
| 88 | $2,133 | $1,706 |
| 89 | $2,192 | $1,723 |
| 90 or older | $2,158 | $1,718 |
Since benefits increase if you choose to delay claiming Social Security, there could be some value in waiting. You might draw from other retirement accounts in the meantime or continue earning income at your job. “By waiting up to age 70, retirees can lock in the biggest benefit checks available based on their work records,” says Krisstin Petersmarck, investment advisor representative at Bridgeriver Advisors in Bloomfield Hills, Michigan. “If longevity is a concern, having the larger Social Security benefit for your lifetime is a major plus.”
[6 Reasons You’re Getting a Smaller Social Security Check]
How Social Security Benefits Are Calculated
The amount you receive in Social Security benefits is determined by a formula that uses your “average indexed monthly earnings,” according to the Social Security Administration. This takes into account how long you worked and paid taxes to the program, up to 35 years. If you worked for longer than 35 years, the SSA will consider your 35 highest-earning years. The amount that you earned during these working years will be added, then divided by the number of months that you worked. The answer, which reflects your average wages, is rounded down to the next lower dollar amount. This figure is then used to determine the benefit you will receive.
Before you retire, you can estimate your benefit. “Understand your earnings record and review for accuracy,” says Christopher Stroup, a financial planner at Abacus Wealth Partners in Santa Monica, California. “Coupled with your age, your earnings record is one of the main factors that determines how large you can expect your Social Security benefit to be.”
Check that you have spent as much time as possible paying into the system. “If you plan to retire early without reaching the 35-year mark, you could be inadvertently dampening your Social Security benefit over the rest of your life,” Stroup says.
What COLA Means and How It Works
Although you’ll likely be living on a fixed income during retirement, costs tend to rise over time due to inflation. For this reason, since 1975, the Social Security Administration has adjusted the amounts sent to beneficiaries every year. These modifications are based on increases in the cost of living and are known as cost-of-living adjustments, or COLA.
The COLA is usually announced every October for the following year. In October 2022, the COLA for 2023 was set at 8.7%. At that time it was the highest COLA in more than 40 years. If you were receiving a Social Security benefit of $1,000 during 2022, in 2023 the paycheck would have risen an additional $87 every month ($1,000 x 1.087), for a total of $1,087 monthly. This is a reflection of the consumer price index, which tracks changes in costs for everyday items such as gas, food and household items.
[What Will the Social Security COLA Raise Be for 2024?]
What Is the 2024 COLA?
By the time the COLA is announced in October for the following year, experts have generally made estimates of what it will be based on current price trends. In September 2023, the Senior Citizens League forecasted COLA to be 3.2% in 2024. While these adjustments aim to help retirees cover costs, they are based on averages. Your monthly budget could shift up or down depending on other variables including where you live and how often you eat out.
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Average Social Security Benefit by Age originally appeared on usnews.com
