Full retirement age for Social Security is 66 to 67, depending on the year you were born, but you can choose to claim a reduced benefit as early as 62. The most popular age to claim Social Security retirement benefits in the United States is, you guessed it, 62. If you're planning on, or are considering, claiming your own benefit as early as possible, here's how to figure out how much you could get.
The maximum Social Security benefit at 62
The short answer is that the maximum Social Security benefit someone could get at age 62, when retiring in 2016, is $2,102. However, for this to happen, some specific criteria need to be met. Specifically, this person must have worked for 35 or more years and earned more than the taxable maximum Social Security wages in every one of those 35 years. For reference, the taxable maximum in 2016 is $118,500.
The person claiming also must have been born in 1954 or earlier (people turning 62 in 2016). Beginning with people born in 1955, the full retirement age is gradually increasing to 67 from 66, which it is now. An increase in the full retirement age means an additional reduction for retirees who claim at 62.
How much could you get?
The vast majority of American workers won't qualify for the maximum benefit, so a better question to ask is "How much could I get at 62?"
Let's start with your projected Social Security benefit at full retirement age, also known as your primary insurance amount, or PIA. This amount is determined by taking your 35 highest-earning years, indexed for inflation, and computing your monthly average earnings. This monthly average is then applied to a formula. As of 2016, the formula is:
- 90% of the first $856
- 32% of the amount greater than $856 but less than or equal to $5,157
- 15% of the amount greater than $5,157
If you know how much your earnings were throughout your career (you can find this on your tax returns), the Social Security Administration (SSA) has a worksheet you can use to estimate your PIA. Or better yet, you can find this information on your annual Social Security statement.
This amount is then adjusted based on the age at which the individual claims their benefits. For people born in 1954 or earlier, full retirement age is 66 years old. Two months are added to full retirement age for each year the individual was born after 1954, until 1960. American workers born in 1960 or later have a full retirement age of 67.
For claiming Social Security before full retirement age, benefits are reduced by the following percentages:
- 6-2/3% per year for the first three years, or 5/9% per month, up to 36 months early
- 5% per year beyond three years, or 5/12% per month beyond 36 months early, as early as age 62.
Let's say that you were born in 1956 and estimate a PIA of $1,500 per month, and want to know how much to expect if you claim at age 62.
A 1956 birth year translates to a full retirement age of 66 years, 4 months. So, claiming benefits at age 62 would be four years and four months before full retirement age. For the first three years, the benefit would be reduced by 6-2/3% per year, or 20% altogether. It would be reduced another 5% for the fourth year, plus an additional 5/12% for each of the remaining four months. In all, the PIA would be reduced by 26-2/3% for claiming at age 62. With a PIA of $1,500, this means that this individual could expect a $1,100 monthly Social Security benefit at age 62.
A good estimate
If you're still a few years or more away from retiring, there's no way of knowing with 100% accuracy what your Social Security benefits will eventually be. Your salary could change, the taxable Social Security wage base could change, or the formula to calculate benefits could potentially change between now and when you're ready to file.
Having said that, you can get a good estimate by creating an account at www.ssa.gov and viewing your most recent Social Security statement. Not only will you get an estimate of your Social Security benefit at 62, full retirement age, and age 70, but you'll also get other valuable information about disability and survivor benefits as well.