A recent report found that almost no retirees are making financially optimal decisions about when to take Social Security and are losing out on more than $100,000 per household as a result. The average Social Security recipient would receive 9 percent more income in retirement if he or she made a financially optimal decision.

When claiming Social Security, you have three options: you may begin taking benefits between age 62 and your full retirement age, you can wait until your full retirement age, or you can delay benefits and take them anytime up until you reach age 70.

If you take Social Security between age 62 and your full retirement age, your benefits will be reduced to account for the longer period you will be paid. If you delay taking retirement, depending on when you were born, your eventual benefit will increase by 6 to 8 percent for every year that you delay, in addition to any cost-of-living increases.

The report, conducted by online investment management and financial planning firm United Income, found that only 4 percent of retirees make financially optimal decisions on when to claim Social Security. Nearly all of the retirees who were not optimizing their benefits were claiming benefits too early.

The study found that 57 percent of retirees would build more wealth if they waited to claim until age 70. More than 70 percent of retirees, however, claim benefits before their full retirement age. Claiming before full retirement is the best financial option for only 6.5 percent of retirees, according to United Income.

The consequences of claiming Social Security too early can be huge. The report found that collecting benefits at the wrong time causes retirees to lose collectively $3.4 trillion in potential income (an average of $111,000 per household). The report also estimates that elderly poverty could be cut in half if retirees claimed benefits at the financially optimal time. People may not be aware that collecting benefits before full retirement age means benefits will be permanently reduced.

According to the report’s authors, policy changes are needed to get retirees to wait to claim benefits. The report recommends that early claims become the exception, reserved for those with a demonstrable need to collect early. It also recommends changing the label “early retirement” to “minimum benefit age.”