Last month, the Social Security Administration announced that the cost of living allowance for retirees would be 3.2%. COLA, as the allowance is known, increased by 8.7% last year, the largest adjustment in more than 40 years.
The average retirement benefit for 2023 was $1,848 per month. Next year, the benefit average rises to $1,907 per month.
New 2024 retirees have a lot to think about
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The maximum monthly benefit payment for a person who retires in 2024 will be $3,822. That amount is available only to new retirees who were born in 1954 and who have reached their full retirement age of 66 years and 6 months in 2024. The full retirement age increases by 2 months in 2025 and 2026 before reaching 67 in 2027. At that point, only Congress can change the full-retirement age.
Americans may begin receiving benefits as early as age 62, but the monthly benefit is reduced. For people turning 62 in 2024, the benefit drops by 27.5% for as long as the recipient lives. Adding the COLA does not change the base amount.
After reaching 62, Americans can begin receiving benefit payments at any time until they turn 70. At that point, a person must begin ‌receiving monthly payments. Waiting until the age of 70 increases the benefit total by 8% for every year past full retirement age.
Here’s an example of how this would work for someone who reaches full retirement age in each of the next four years and receives a benefit of $2,000 a month. The COLA increase is not included. The calculation for waiting until a retiree reaches age 70 includes an additional 8% per year for delaying.
| Birth year | Reduction for early payment | Monthly benefit at age 62 | Monthly benefit at age 67 | Monthly benefit at age 70 |
| 1957 | 27.5% | $1,458 | $2,000 | $2,721 |
| 1958 | 28.3% | $1,434 | $2,000 | $2,519 |
| 1959 | 29.2% | $1,416 | $2,000 | $2,333 |
| 1960 or later | 30.0% | $1,400 | $2,000 | $2,160 |
How to maximize benefit payments
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If you choose to wait until full retirement age before receiving benefit payments, you will have to live until you are 79 to receive more in total payments than if you had begun at age 62. The following chart uses data from accounting firm Mason + Rich to show cumulative amounts paid in benefits for retirees who begin receiving payments beginning at ages 62, 67, and 70. The entries in bold type indicate the point at which those who waited to receive benefits overtook those who didn’t delay at all or for as long. The amounts do not include COLA changes.
| Receive monthly benefit of $1,400 at age 62 | Receive monthly benefit of $2,000 at age 67 | Receive monthly benefit of $2,480 at age 70 | |
| Live to age 70 | $134,400 | $72,000 | – |
| Live to age 75 | $218,400 | $192,000 | $148,800 |
| Live to age 79 | $285,600 | $288,000 | $267,840 |
| Live to age 80 | $302,400 | $312,000 | $297,600 |
| Live to age 83 | $352,800 | $384,000 | $386,880 |
| Live to age 85 | $386,400 | $432,000 | $446,400 |
| Live to age 90 | $470,400 | $552,000 | $595,200 |
Note that a surviving spouse continues to receive 100% of the benefit payment until their death.
A note on life expectancy
While it’s not possible for most of us to determine how long we’ll live, it may be useful to spend a minute thinking about life expectancy in the United States. Before the COVID-19 pandemic, life expectancy at birth for an average American was 78.9 years, according to a report from the National Center for Biotechnology Information. Just two years later, that figure dropped to 75.8 years, a decline of almost 3.1 years.
Someone at age 35 in January 2020 could have been expected to live another 45.5 years. Two years later, life expectancy for that 35-year-old had dropped to 42.5. Someone 65 years old could have been expected to live another 19.6 years in 2020. In 2022, that expectation dropped to 17.5 years. The study also slices the data by race and ethnicity.
According to the Social Security Administration’s life expectancy data for 2020, men who were 70 years old could expect to live another 13.6 years. Women of the same age could expect to live for another 15.8 years.
According to the CDC, the life expectancy for women in the United States in 2021 was 79 years. For men, it was 73.
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