Thankfully, Social Security benefits have grown since the first check was cut to one Ida May Fuller in 1940. The $24.54 she received from check number 00-000-001 wouldn’t go very far today. Thanks to several Acts of Congress and dozens of cost of living adjustments (COLAs), the average check today is much higher, providing a lifeline to millions of Americans.
The roughly $1.5 billion in benefits the Social Security Administration (SSA) paid out last year ensured that retirees across the country can support themselves, bridging the gap between personal savings and the true cost of living. SSA benefits represent 30% of all income for people over 65, but for roughly 1 in 7 retirees, the checks are all they have.
The average benefit
There are a lot of factors that go into how much someone’s benefit turns out to be. How long someone worked, how much they earned, and when they began claiming benefits can all move the needle significantly. Still, having an average benchmark can be useful. Currently, for 72-year-old people, the average check is $1,915.61.
When you claim makes a huge difference
If you’re nearing retirement, the only factor you really have control over is when you decide to claim. If you wait until your full retirement age (FRA), you’ll receive 100% of your primary insurance amount (PIA). If, however, you claim early, let’s say at age 62, you’ll lose out on a significant amount of money, only receiving 70% of your PIA.
If you have the ability to wait beyond your FRA to claim, you’ll receive a higher benefit amount. Each year that you delay past your FRA, you’ll earn an extra 8% until age 70, at which point you’ll max out your benefit.
Understanding all of the complexities of Social Security is critical. You don’t want to make a decision that will cost you later based on a misunderstanding.
