For many retired Americans, Social Security may be their primary source of income — so choosing when to start receiving benefits to maximize that income can be a big decision. There’s no one-size-fits-all approach, though: Timing when it may be right depends on personal circumstances, such as overall retirement savings, desired retirement lifestyle, health considerations, life expectancy, and if there are other sources of income.

Time is money

With Social Security benefits, the adage that time is money holds true — the benefit increases by waiting to collect, up until age 70. Currently, it’s possible to claim Social Security benefits as early as age 62 based on work history, but the full benefit isn’t available until full retirement age (FRA). For anyone born after 1960, the FRA is age 67.¹ Clocking out early to cash in means lower monthly payments to help fund retirement, while delaying up to age 70 will result in monthly payments higher than the full benefit amount.

62 vs. 67 vs. 70

To shed some additional light, consider this basic example:

Jane, Mark, and Amy are all single and share the same birthday of January 2, 1960. The full monthly benefit at their FRA of 67 is $1,000 ($12,000 for the first year). Jane decides to claim her benefits early at age 62, which reduces her benefit by about 30% to $700 monthly ($8,400 for the first year).² Mark chooses to begin receiving benefits at 67, his FRA, so he’ll receive the full benefit of $1,000 ($12,000 for the first year). Amy is holding off until age 70 to collect, so she’ll receive a delayed retirement credit,³ increasing her monthly benefit to 124% of the full benefit, or $1,240 monthly ($14,880 in year one).

Each year, Social Security benefits are reviewed and recalculated to help keep pace with inflation, and in the last decade annual cost of living adjustments (COLA) have averaged 2.6%.⁴ This scenario uses an annual COLA of 2.5%, so payment calculations are increased by that amount each year. (Keep in mind these are not actual amounts and have been simplified for illustrative purposes.)

Jane, who decided to claim benefits early at age 62, will have collected $83,618 by the time she turns 70, while Mark will have received about 60% as much and Amy will be in her first year of collecting benefits.

It takes 15 years, until age 81, for Mark’s total benefits to surpass Jane’s, and even longer, until age 83, for total benefits received to even out for Amy. In other words, while waiting until 70 results in the largest monthly payout, delaying may not mean a bigger payout overall. Here’s where the average life expectancy, which is 77.5 years (74.8 for men and 80.2 for women),⁵ may factor into decision making.

When does it pay?

Some may choose to delay claiming benefits because they have other sources of income that may be higher than their benefit payments. While people can continue to work and earn additional income at the same time they receive benefits, it can get tricky: Since the Social Security Administration (SSA) considers those who collect benefits as essentially retired, they limit earnings. For individuals who collect before reaching their FRA, the limit on earnings is $22,320 in 2024 and $23,400 in 2025.⁶ If they exceed the earnings limit, the SSA deducts $1 from benefits payments for every $2 earned above the annual limit.⁷ For example, Jane worked part time in 2024 and earned a total of $25,200, $2,880 above the limit. This means the SSA will deduct $1,440 from her annual benefits in 2024.

Earnings limits are higher when someone is at their FRA: $59,520 in 2024 and $62,160 in 2025.⁸ If individuals go over the limit the year they reach their FRA, the SSA deducts $1 for every $3 earned above it in the months leading up to the date of birth.⁹ In this scenario, Jeff reached his FRA on December 1, 2024. As of that date, he’d earned $72,000 in 2024, $12,480 above the limit. The SSA will deduct $4,160 from Jeff’s benefits. Any benefits withheld are considered lost.

After reaching the FRA, there’s no longer any limit on earnings. So, if a person has a steady income stream, it can make sense to hold off claiming benefits for as long as possible. It’s important to remember that there’s no additional upside to waiting beyond age 70, as benefits no longer continue to increase.

Bottom line considerations

Ultimately, personal circumstances should dictate whether it pays to claim benefits early—but there are a few instances to keep in mind when deciding, including:

✔️ Health/medical issues

✔️ Cashflow

✔️ Collecting early provides more time to invest

✔️ If working has become difficult or draining or it feels like it’s time leave the workforce

While it may take years before the higher monthly payout makes a difference in the bottom line, conventional wisdom suggests that holding out until age 70 may be the better option for those who can afford it. The SSA’s Online Benefits Calculator can be a useful tool to help calculate benefits based on age.¹⁰