When Does the Average American Claim Social Security?

By MarketsFool.com

The short answer is that the average American claims Social Security at 64.5 years of age. Most people claim at or before their full retirement age and less than 10% wait longer to claim benefits. However, the data shows that over time, more people are waiting longer to claim their benefits than in previous generations. Here are the details of when Americans claim Social Security and how your age will affect your own Social Security benefit.

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When do Americans claim Social Security?

According to data from the Social Security Administration for 2015, the most recent year for which data is available, 2,838,988 Americans claimed Social Security retirement benefits. Of this amount, 1,668,226 people had their benefits reduced for early retirement. In other words, about 59% of Americans claimed Social Security benefits before their full retirement age.

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The average beneficiary age for all newly awarded Social Security retirement benefits in 2015 was 64.5 years of age, and here's the full breakdown:

Data source: Social Security Administration 2016 Statistical Supplement. Percentages may not add to 100% due to rounding.

According to this data, the most popular age for claiming Social Security is 62, as early as possible, with full retirement age coming in at a close second.

However, it's important to point out one very important fact. Of the people who were awarded benefits at their full retirement age, roughly half were in the form of disability conversions. When people receive Social Security disability benefits, they convert to retirement benefits automatically, starting at full retirement age. In other words, half of this group didn't choose to claim retirement benefits at full retirement age -- it happened as part of an automatic process.

When backing out this data, the distribution changes quite a bit. Here's the breakdown of the ages when people chose to claim Social Security retirement benefits in 2015:

Data source: Author's own calculations, based on Social Security Administration 2016 Statistical Supplement. Percentages may not add to 100% due to rounding.

The point is that when you exclude Americans whose disability benefits were automatically converted to Social Security retirement benefits at full retirement age, it's much clearer that 62 is by far the most popular age to claim Social Security benefits. Full retirement age is still the next most popular age, as it is the age where retirees can get their benefit without a reduction. 65 is also a popular age to collect Social Security, which makes sense, since it's a popular "full retirement age" in the corporate world, and is the age at which Americans are eligible for Medicare. In all, 85% of men and 86% of women choose to claim their Social Security retirement benefit at or before their full retirement age.

How early Social Security affects your benefits

It's interesting that the majority of Americans decide to claim Social Security early, despite the benefit reduction that comes with it.

Specifically, if you claim Social Security before your full retirement age, your benefit will be reduced at the following rate:

  • 6 2/3% per year, or 5/9% per month, for up to three years (36 months) before full retirement age
  • 5% per year, or 5/12% per month, beyond 36 months

So, if someone whose full retirement age is 66 claims benefits at 62, their benefit will be permanently reduced by 25%. This means that if a retiree would have been entitled to $1,600 per month at full retirement age, their monthly benefit would be reduced to $1,200 -- a big difference.

Plus, the full retirement age is gradually rising to 67 for people born after 1954, so the reductions are going to be even greater for claiming at age 62 in the years ahead. Here's a guide to help you figure out your own Social Security full retirement age.

More people are choosing to wait

One interesting trend worth mentioning is that people are gradually waiting longer to claim their Social Security benefits. The average age of a new Social Security retirement beneficiary has steadily increased over the past decade, by approximately one year.

This is because far fewer Americans are choosing to claim benefits early. In 2005, 57% of men and 60% of women (excluding disability conversions) chose to claim their retirement benefits at 62 -- compared with 38% and 44%, respectively, in 2015. Fewer than 1% of men and about 2% of women waited until age 70 a decade ago, and while waiting still isn't a popular option, three times as many people are choosing to delay benefits as long as possible now.

With the full retirement age set to gradually increase to 67 for beneficiaries claiming over the next decade or so, I wouldn't be surprised to see this trend continue.

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