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Should I Start Drawing My Benefits Before Age 70 If I'd Already Be Eligible For The Maximum Amount?

I am waiting until I am 70, in 2 years, to claim my Social Security benefit to maximized it. My SSA statement says that my benefit at 70 would be $4025. I read that the maximum benefit for 2022 is $3895. Assuming that my projected benefit at 70 exceeds that maximum Social Security benefit, should I take my benefit before 70, (at around the point where I figure my benefit would equal the maximum amount)? It seems like waiting beyond that would not result in a higher payout.

Hi. There is no such thing as a 'maximum' Social Security benefit amount. Social Security retirement benefits are based on an average of a person's highest 35 years of Social Security covered wage-indexed earnings, and benefit rates can be recalculated after any year in which a person has a higher year of earnings. Therefore, a person's benefit rate can potentially continue to increase indefinitely if they keep working. There is no ceiling to that amount.

I don't know the reference for the so called 'maximum' benefit amount cited in your question, but I suspect that amount represents the most that a person who turns age 70 in 2022 could potentially receive if they earned the maximum Social Security covered earnings amount in all of the past 35 years and if they wait until age 70 to start collecting. In other words, when you see something that refers to a maximum Social Security benefit rate, it generally refers to the highest benefit rate that a person born in a given year could be due at a given point in time. But, there is no statutory limit on the amount of anyone's monthly benefit.

The fact is that you will continue to accumulate delayed retirement credits (DRC) for each month that you delay starting your benefits until the month you reach age 70. And, each DRC will increase your benefit rate by 2/3rds of 1%. Again, there is no maximum or ceiling amount involved. If you start drawing your benefits before age 70, you'll simply lose the DRC credits that you could have earned and your monthly benefit rate will be lower as a result.

Best, Jerry

Dec 21 2021 - 10:42am
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