The vast majority of Americans qualify for Social Security benefits, either on their own work record or their spouse's. And those who qualify can choose to start collecting their monthly payments as early as age 62 or as late as age 70.
However, the age at which you claim Social Security makes a big difference when it comes to how much money you'll get. Here's how the rules work for early and late retirement, and what it could mean to your wallet.
Image source: Getty Images.
What's your full retirement age?
Many Americans, especially the younger generations, mistakenly believe full retirement age is 65 years old. To be sure, it used to be 65, and this is still the age at which you can get Medicare.
However, if you were born in 1960 or later, your full retirement age for Social Security purposes is 67. If you were born before that, you can find your full retirement age on this table:
|
Birth Year |
Full Retirement Age |
|---|---|
|
1960 or later |
67 years |
|
1959 |
66 years, 10 months |
|
1958 |
66 years, 8 months |
|
1957 |
66 years, 6 months |
|
1956 |
66 years, 4 months |
|
1955 |
66 years, 2 months |
|
1954 or earlier |
66 years |
Data source: Social Security Administration.
Early or late Social Security
If you apply for Social Security retirement benefits before you reach full retirement age, your benefit will be permanently reduced according to the following rules:
- 67% reduction for each year before full retirement age, up to three years.
- 5% reduction for each year beyond three years early.
This means if your full retirement age is 67 and you claim benefits at 62, you're facing a 30% permanent reduction.
On the other hand, if you wait until after full retirement age, your benefit will be permanently increased by 8% for every year you wait, as late as age 70.
An example of how it works
Let's say that you have average inflation-adjusted earnings throughout your career of $6,000 per month and that you turn 62 in 2025. The Social Security benefit formula that would be applied to your work record is:
- 90% of the first $1,226
- 32% of the amount greater than $1,226 but less than $7,391
- 15% of the amount greater than $7,391
Using this formula, we can find that a $6,000 average monthly income would correspond to a Social Security benefit of approximately $2,631. However, this is the amount you would get if you waited until age 67, your full retirement age. If you started collecting at a different age, here's how it would affect your monthly checks:
|
Claiming Age |
Reduction/Increase |
Initial Monthly Benefit |
|---|---|---|
|
62 |
(30%) |
$1,842 |
|
63 |
(25%) |
$1,973 |
|
64 |
(20%) |
$2,105 |
|
65 |
(13.3%) |
$2,280 |
|
66 |
(6.7%) |
$2,456 |
|
67 |
N/A |
$2,631 |
|
68 |
8% |
$2,841 |
|
69 |
16% |
$3,052 |
|
70 |
24% |
$3,262 |
Data source: Author's own calculations. Amounts rounded to the nearest dollar and are in 2025 dollars (ignoring future COLAs).
Even a few months can make a big difference
As a final thought, although I gave all of the early and delayed retirement changes as annual percentages, it's important to mention that all of them are calculated on a monthly basis.
In other words, since the increase for delayed retirement is 8% for every year you wait, it works out to 0.67% for every month you choose to wait. This means that if you are entitled to a $2,500 monthly benefit at full retirement age, every month you wait would be worth about $17 in additional, inflation-protected monthly income in retirement.
The bottom line is that it's important to know how early or delayed Social Security can impact your monthly benefits. Before you apply for Social Security, it might be worth asking yourself if waiting for a little while might be a smart idea.
