Are you thinking about claiming your Social Security benefits soon? Before you decide to start taking your benefits, it's important to determine if you've reached your full retirement age. If you haven't, claiming Social Security now instead of waiting could result in much lower benefits.

How much will your Social Security benefit be reduced if you retire early?

Social Security benefits are calculated based on a formula that factors in your highest 35 years of earnings, adjusted for wage growth. The formula determines what your standard benefit amount is, which is the benefit you receive if you retire at the age the Social Security Administration designated as your full retirement age (FRA).

Two Social Security cards sitting on top of a $100 bill.

Image source: Getty Images.

When you retire and claim Social Security before FRA, you reduce your standard benefit -- the amount of money you'd receive at FRA -- by 5/9 of 1% for the first 36 months before FRA and an additional 5/12 of 1% per month for each earlier month if you retire more than 36 months early. That's about a 6.7% annual reduction if you retire less than three years early and an additional 5% reduction if you retire more than three years early.

If you're not sure exactly how that all adds up, the table below shows how much your benefits could be cut if you retire before a full retirement age of 67, which is the FRA for anyone born after 1960.

Age of Retirement

Change in Monthly Benefits Compared to FRA


30% reduction


25% reduction


20% reduction


13.3% reduction


6.7% reduction


No change


These reductions in benefits make a real difference. A $1,500 standard benefit at FRA would become a $1,050 benefit if claimed at age 62 thanks to the 30% reduction.

If you retire late instead of early, you earn delayed retirement credits. This means benefits increase by 2/3 of 1% per month up until age 70. This is an 8% increase each year. If full retirement age was 67 and you retire at 70, you'd get 24% more each month, as the table below shows. A $1,500 benefit at 67 would become an $1,860 benefit at 70. 

Age of Retirement

Change in Monthly Benefits Compared to FRA


No change


8% increase


16% increase


24% increase


Should you wait to claim benefits?

Because you get a big benefits cut by retiring early, it often makes sense to delay claiming your benefits to get more money. However, if you delay and miss out on years of benefits, you'll have to figure out how long it will take you to break even. To do this, add up the benefits you missed and divide that number by the higher monthly benefit you get because you delayed.

For example, if you get a $1,050 benefit for retiring at age 62 instead of a $1,500 benefit for retiring at 67, you received $12,600 per year for an extra five years you wouldn't have received if you'd waited until 67 -- that's $63,000. Your monthly benefit, because you waited, is $450 higher, so it would take you 140 months ($63,000 divided by $450), or 11.6 years, to break even. If you live 11.6 years after age 67 -- to age 78.6 -- you've broken even. As you continue to receive benefits, you'll be getting money you would have forgone by claiming early.

While it's impossible to know how long you'll live, you can take into account your health status and family health history to project your lifespan and determine if you'd be better off by waiting to claim benefits. 

Deciding when to claim Social Security is a tough choice

Since you can't predict the future, it's impossible to know if you'll be financially better off by claiming Social Security benefits as early as possible. There are arguments both for and against early retirement, but the key is to understand that your benefits will be cut if you claim Social Security early and to make an informed choice about whether to claim early anyway or delay as long as you can.