Social Security benefits can be claimed between the ages of 62 and 70. However, every retiree has been given a full retirement age (FRA) based on their birth year. FRA is the age you get your standard benefit. Claiming anytime before FRA will shrink that standard check amount, leaving retired workers with less to live on. Delaying beyond FRA, however, would increase benefits due to delayed retirement credits.
The impact of an early claim can be quite substantial, and those who file for benefits at a young age may not receive nearly as much money from Social Security as they may have hoped for. Let's take a look at the average Social Security benefit among early claimers to better understand how benefits are affected.
Image source: Getty Images.
The average Social Security benefit for early claimers
Full retirement age is 67 for anyone born in 1960 or later, while the FRA is 66 and 10 months for those born in 1959. An early claim would be any claim made before reaching these age milestones.
The Social Security Administration publishes data showing average benefits by claiming age, as seen in the table below.
|
Age |
Average Retired-Worker Benefit |
|---|---|
|
62 |
$1,342 |
|
63 |
$1,364 |
|
64 |
$1,425 |
|
65 |
$1,611 |
|
66 |
$1,764 |
|
67 |
$1,930 |
Table source: Social Security Administration.
As you can see, the average Social Security benefit is much lower for 62-year-olds than it is for those who are 67.
Why are benefits lower for early filers?
There are a few key reasons why Social Security benefits may be lower for early filers. First, benefits may be based on a lower average income. Those who don't work as long may have had fewer years of working at peak earning capacity since income tends to increase over time. Since benefits are based on average wages, the more years you work when you're earning a higher rate, the higher your benefit climbs.
Higher earners may also be more likely to work in jobs that enable later retirement, so those who are already on track for a bigger benefit may be more likely to work longer and thus delay their benefits claim.
Early filing penalties also make a big impact. Anyone who files for benefits before FRA will see their monthly payments reduced by 5/9 of 1% for each of the first 36 months they get a check before FRA and by 5/12 of 1% for any prior month before that. This ultimately adds up to a 6.7% reduction in years one, two, and three that you get benefits ahead of FRA, and a 5% reduction in years four and five. If you're 62 and claim benefits with a FRA of 67, you'll see your standard benefit shrink by 30%.
The reality is, none of these average benefits at any age are likely enough to live on without supplementary income. But those who claim earlier will see Social Security cover even less of their costs, so they must be prepared with plenty of savings to fill the gap if they don't want to struggle during their later years.
