Benefits Planner: Retirement | Retirement Age and Benefit Reduction (2025)

FAQs

What is the benefit reduction for early retirement? ›

The overall difference can be substantial. Claiming at 62, for instance, means you'll receive 30% less than your benefit at full retirement age, assuming that is 67. Waiting until 70 means you'll get 24% more in Social Security, because of delayed retirement credits, than if you'd claimed at full retirement age.

Early retirement

You can receive Social Security retirement benefits as early as age 62. However, we'll reduce your benefit if you start receiving benefits before your full retirement age. For example, if you turn age 62 in 2024, your benefit would be about 30% lower than it would be at your full retirement age of 67.

If a worker begins receiving benefits before his/her normal (or full) retirement age, the worker will receive a reduced benefit. A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent.

The 1983 overhaul of Social Security gradually raised the age to 67, which it reached in 2022 for those born in 1960 or later — effectively cutting benefits by 13 percent as compared to benefits if the retirement age had remained at 65.

Understanding the $1,000-a-Month Rule: The $1,000-a-month rule is a simplified formula designed to help individuals calculate the amount they need to save for retirement. According to this rule, one should aim to save $240,000 for every $1,000 of monthly income they anticipate requiring during retirement.

Under the Reduced Benefit Election (formerly the Limited-Term Reduction Program), you can receive one-half of the monthly benefit amount calculated as if you were age 60. The reduced benefit will continue for the same number of months after age 60 that you received benefits before age 60.

If you start receiving benefits at age 66 you get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase. The chart below explains how delayed retirement affects your benefit.

Deadlines, long hours, and workplace conflicts can all contribute to physical and mental stress. The earlier you retire, the better it may be for your overall health. Research suggests that retiring earlier in life can help you stay healthier for longer.

Social Security can potentially be subject to tax regardless of your age. While you may have heard at some point that Social Security is no longer taxable after 70 or some other age, this isn't the case. In reality, Social Security is taxed at any age if your income exceeds a certain level.

If you are younger than full retirement age and earn more than the yearly earnings limit, we may reduce your benefit amount. If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit.

What is the reduced retired pay age? ›

REDUCED RETIRED PAY AGE

The National Defense Authorization Act for 2008 reduced the retirement age for Reserve Component airmen from 60 to a lesser age, not to be any earlier than age 50. The reduced retired pay age is calculated with qualifying service days on or after Jan. 29, 2008.

Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.

As we have discussed, you are eligible to start claiming your benefit when you turn 62. But the benefit you receive at 62 will be permanently lower than if you wait. Every month past age 62 you don't claim your benefit entitles you to a slightly larger payout when you do start collecting your benefit.

When it might make sense to take Social Security at 62. You need the money now. You have health issues that may shorten your life expectancy, or you don't expect to live past your break-even point. You're receiving early retirement from an employer and the benefits end at age 62.

Start Collecting Early

He claims that doing so will give you a greater return than you would get by waiting until a later age to apply for Social Security, which means you get a bigger monthly check. “It usually makes sense to take it early if you're going to … invest every bit of it,” Ramsey said in a 2019 podcast.

You typically must work until your company's normal retirement age (usually 65) to receive the maximum benefits. This means that you may receive smaller benefits if you accept an offer to retire early.

ARER is when you take your pension benefits before your Normal Pension Age (NPA). This is also known as Voluntary Early Retirement. As your benefits are being paid early and for longer, the amounts are reduced. The amount of the reduction depends on your age at the payable date of the benefits.