The bonus that retirees get from waiting to claim Social Security income benefits increases in two steps. These steps, originally created as a shortcut to simplify benefit calculations, result in differences as high as $10,000 in the incremental value of waiting an additional year to reach each new step.

Claiming before the valuable step-years can be a costly mistake. Workers who claim at full retirement age lose a significant amount of wealth by not taking advantage of the most valuable 8 percent one-year step increase.

A worker in 2022 who is eligible to receive $20,000 in Social Security income benefits at age 62 can increase her income by waiting to claim, up to age 70. The percentage increase is 5 percent each year up to age 64. It steps up after her 64th birthday to 6.67 percent each year until her full retirement age (67 for someone born in 1960). After reaching 67, the bonus steps up again to 8 percent a year until age 70. 

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Michael Finke

Michael Finke is a professor and Frank M. Engle Chair of Economic Security at the American College of Financial Services and leads the Wealth Management Certified Professional designation program. [email protected]

Retirement & Benefits
Analysis