Understanding Your Full Retirement Age
Your Full Retirement Age (FRA) is the age at which you are entitled to receive 100% of your monthly Social Security benefit. This age is not the same for everyone but is determined by your year of birth. For anyone born in 1960 or later, your FRA is 67. The FRA for those born between 1943 and 1959 is slightly younger, increasing in two-month increments for each birth year. The specific month and year of birth are essential for pinpointing your exact FRA. If you were born on the first of the month, the Social Security Administration treats your birthday as if it occurred in the previous month.
The Permanent Impact of Claiming at 62
By claiming your benefits at age 62, you are choosing to receive a smaller monthly check for the rest of your life. For those with an FRA of 67, taking benefits at 62 means receiving them 60 months early. The reduction is calculated on a monthly basis, resulting in a permanently reduced benefit. This reduction is up to 30% for those born in 1960 or later. The reduction is calculated in two parts: a larger reduction for the first 36 months and a smaller one for any additional months.
How the reduction is calculated
The Social Security Administration applies a reduction based on how far in advance of your FRA you claim benefits. This formula determines the size of your reduced monthly payments. The total percentage reduction adds up significantly over five years, creating a lasting effect on your retirement income.
Working While Receiving Early Benefits
Claiming Social Security at 62 doesn't mean you have to stop working. However, if you are younger than your FRA and continue to work, your benefits could be temporarily reduced based on your earned income. For 2025, if you are under your FRA for the entire year, $1 in benefits will be deducted for every $2 you earn over the annual limit ($23,400). This earnings limit applies only to wages and self-employment income, not investment income. Once you reach your FRA, your benefits are no longer subject to the earnings test, and the SSA will recalculate your benefit amount to give you credit for any benefits that were withheld.
The Benefit of Delaying Your Claim
Delaying your Social Security benefits past your FRA, up to age 70, can substantially increase your monthly payments for life. For every year you delay, you earn delayed retirement credits (DRCs). These credits are worth an extra 8% per year for those born in 1943 or later, maxing out at age 70. Delaying provides a powerful hedge against longevity risk, ensuring a higher inflation-protected income stream for your later years.
Early vs. Delayed Claiming: A Comparison
| Aspect | Claiming at Age 62 | Claiming at FRA (e.g., 67) | Claiming at Age 70 |
|---|---|---|---|
| Monthly Benefit | Permanently reduced by up to 30% | 100% of your Primary Insurance Amount (PIA) | Up to 124% of your FRA benefit |
| Total Lifetime Benefits | More checks over a longer period, but each is smaller | A balanced approach, receiving full benefits later | Higher individual monthly checks, but fewer years of payments |
| Earnings Impact | Subject to annual earnings limits until FRA | No earnings limit impact on benefits | No earnings limit impact on benefits |
| Longevity Risk | Benefits are lower, which may be a concern if you live a long time | A higher benefit than at 62 provides better long-term security | Maximize your individual monthly payout, protecting against inflation |
Spousal and Survivor Benefits
Your claiming decision also impacts your spouse and can affect survivor benefits. A lower-earning spouse can claim up to 50% of the higher earner's full benefit amount upon reaching their own FRA. If they claim early, this spousal benefit is also reduced. For survivor benefits, the surviving spouse is generally eligible for 100% of the deceased's benefit. If the higher-earning spouse claims early and receives a reduced benefit, it can permanently lower the survivor benefit for the partner. This aspect is crucial for couples to consider when coordinating their claiming strategies to maximize their combined lifetime income.
Making Your Decision: A Holistic Approach
Deciding when to start your benefits is a deeply personal financial choice that should not be made lightly. While the desire for early retirement is strong, understanding the trade-offs is critical. Your health, other sources of retirement income, and expected longevity are all variables that can play a role in your decision. If you are in good health and have sufficient alternative funds, delaying can offer a significant financial advantage. Conversely, if you have health issues or need the income immediately, claiming early may be the right choice. Consider how your decision affects your overall retirement plan, not just the initial monthly payment.
For more detailed information and personalized estimates, the Social Security Administration's website is an invaluable resource. The official website, www.ssa.gov, offers a variety of tools and publications to help you plan your retirement.
Conclusion
While you can begin receiving Social Security at 62, you will not receive full benefits. The monthly payments are permanently reduced, a factor that has long-term implications for your financial security in retirement. For those born in 1960 or later, this could mean a 30% reduction. Understanding your full retirement age, the potential for earning penalties while working, and the substantial upside of delayed retirement credits are all critical parts of making an informed decision. Ultimately, the best age to claim is the one that best aligns with your health, financial needs, and overall retirement strategy.
