To take full advantage of Social Security benefits, we all need to first understand how retirement age affects monthly payments, for better or worse.
In 2024, the maximum Social Security benefit varies significantly depending on the age at which you decide to retire. But do you know how this works when it comes to retirement age and the impact that decision has on your payments?
Social Security offers different levels of benefits depending on the age at which the individual chooses to start receiving them:
- Age 62: $2,710 per month
- Full retirement age (FRA): $3,822 per month
- Age 70: $4,873 per month
But How Do You Know When You Can or Should Retire?
Well, although it is always a personal decision, it is best to have all the information so that you can weigh it properly and patiently, and thus not leave money on the table at the time of retirement
The three factors that must converge to claim nearly $5,000 from Social Security:
The first thing the Social Security Administration (SSA) looks at to calculate your benefits is your income history. Social Security calculates your benefit based on your adjusted average income during the top 35 earning years of your career. Earning more during these years can significantly increase your monthly benefits.
Then, there is the age at which you decide to apply for your retirement. Choosing to retire before full retirement age (FRA) may result in reduced monthly benefits. For example, if you decide to retire at age 62, your monthly benefits could be up to 30% lower than if you waited until the FRA or beyond.
Finally, your payments are affected by that thing the SSA calls cost-of-living adjustment (COLA) of Social Security, which aims to help beneficiaries maintain their purchasing power in the face of inflation each year.
How to Qualify for the Maximum Possible Social Security Retirement in 2024
To reach the maximum possible retirement, delay retirement as much as you can. For example, if you postpone retirement until age 70, you could receive a much higher monthly benefit than if you retire earlier.
Increase your income in the years leading up to retirement, especially if you have not yet reached the maximum income subject to social security for 35 years. Any gap in income can be filled by working more or looking for additional income.
Whenever you are going to make a move related to your retirement, consult a financial advisor so that, together, you can develop the best strategy customized to your situation, and thus optimize your savings. This may include decisions about when and how to start receiving benefits, considering factors such as the tax impact and long-term financial security.
Maximum Social Security Amounts According to Retirement Age
- Age 70: Up to a maximum of $4,873
- Age 67: Up to a maximum of $3,911
- Age 66: Up to a maximum of $3,652
- Age 65: Up to a maximum of $3,426
- Age 62: Up to a maximum of $2,710
