Filing for Social Security is one of the biggest decisions of your life, as it can directly affect the monthly and lifetime retirement income you receive. You work hard to pay into the Social Security benefits system and earn your benefits, and you owe it to yourself to understand how the age when you claim them will affect you.
Fortunately, if you understand a few basic Social Security rules about early filing penalties, you can see exactly how much early filing reduces your benefit, and decide if it's the right move for you.
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What is an early claim?
To understand how an early claim affects your checks, it's helpful first to know what an early claim is. Filing for Social Security benefits early means that you file for benefits before your full retirement age (FRA). FRA depends on your birth year. Here's what yours is, depending on when you were born:
- 1958: 66 and 8 months
- 1959: 66 and 10 months
- 1960 or later: 67
Filing early means you claim your first benefit any time before the designated age. So if your FRA is 66 and 8 months but you sign up for Social Security at 60, you are eight months early.
How much does an early claim cut your Social Security check?
An early Social Security claim results in early filing penalties. These are penalties that apply on a monthly basis and reduce your standard benefit amount, or primary insurance amount (PIA).
Your primary insurance amount is available right at FRA. It equals a percentage of inflation-adjusted average wages earned in your 35 highest-earning years. When you claim early, that benefit shrinks by 5/9 of 1% per month for the first 36 months, and 5/12 of 1% after that.
The chart below shows exactly how much the reduction will be, based on just how many months you start checks ahead of schedule.
|
If you file this many months early |
Your standard benefit will be reduced by: |
If you file this many months early |
Your standard benefit will be reduced by: |
If you file this many months early |
Your standard benefit will be reduced by: |
|
60 |
30.000% |
40 |
21.667% |
20 |
11.111% |
|
59 |
29.583% |
39 |
21.250% |
19 |
10.556% |
|
58 |
29.167% |
38 |
20.833% |
18 |
10.000% |
|
57 |
28.750% |
37 |
20.417% |
17 |
9.444% |
|
56 |
28.333% |
36 |
20.000% |
16 |
8.889% |
|
55 |
27.917% |
35 |
19.444% |
15 |
8.333% |
|
54 |
27.500% |
34 |
18.889% |
14 |
7.778% |
|
53 |
27.083% |
33 |
18.333% |
13 |
7.222% |
|
52 |
26.667% |
32 |
17.778% |
12 |
6.667% |
|
51 |
26.250% |
31 |
17.222% |
11 |
6.111% |
|
50 |
25.833% |
30 |
16.667% |
10 |
5.556% |
|
49 |
25.417% |
29 |
16.111% |
9 |
5.000% |
|
48 |
25.000% |
28 |
15.556% |
8 |
4.444% |
|
47 |
24.583% |
27 |
15.000% |
7 |
3.889% |
|
46 |
24.167% |
26 |
14.444% |
6 |
3.333% |
|
45 |
23.750% |
25 |
13.889% |
5 |
2.778% |
|
44 |
23.333% |
24 |
13.333% |
4 |
2.222% |
|
43 |
22.917% |
23 |
12.778% |
3 |
1.667% |
|
42 |
22.500% |
22 |
12.222% |
2 |
1.111% |
|
41 |
22.083% |
21 |
11.667% |
1 |
0.556% |
Table created by author.
As you can see, while you only lose a small percentage each month, this adds up. In fact, if your FRA is 67 and you claim at 62, the earliest age when benefits become available, you'll see your standard benefit cut by a whopping 30%.
Now, this doesn't mean there's no situation when a claim ahead of FRA makes sense. In fact, there are lots of times you might want to begin benefits early, including when you want to retire at a younger age and starting Social Security is the only way to make that happen.
Just be sure you know the consequences of your choice, as your monthly benefit will be smaller for the rest of your life.
