Pamela Kweller RSSA Staff
You are correct, you can receive Social Security benefits beginning at age 62. However, you will receive a lot more money if you wait to claim your benefits until later. You will actually receive the least amount you could possibly get if you choose to claim benefits at age 62.
Why? Good question.
Although you are permitted to claim benefits at age 62, 62 is not your FRA. FRA stands for Full Retirement Age, commonly referred to as “Normal Retirement Age.” Your FRA is determined by the year you were born.
Check out this chart to determine your FRA.
Your FRA is the age at which you will receive the full monthly benefit you have earned from all the years you have contributed into the system. The amount of this monthly benefit is unique to you and is determined by a complex calculation.
This monthly benefit is referred to as your PIA. PIA stands for Primary Insurance Amount. Your PIA is the monthly Social Security benefit you have earned and are entitled to if, and only if, you choose to claim at your FRA.
If you choose to claim your benefits at your FRA, you will receive 100% of your PIA or monthly benefit. However, if you choose to claim your benefits earlier than your FRA such as age 62, your monthly payment will be reduced. On the other hand, if you choose to claim your benefits after your FRA, your monthly payment will be increased up until age 70.
Here is an example:
Jack was born in 1954 which means his FRA is 66. Jack will turn 66 this year, in 2020. If Jack chooses to claim his benefits when he turns 66, he will receive 100% of his PIA. However, if he already claimed his benefits when he turned 62, he would only receive 75% of his PIA. Once benefits are claimed, benefits remain the same forever. If Jack claimed at age 62, he would receive 75% of his PIA every month for the rest of his life. On the upside, if Jack decides to wait to collect his benefits until age 70, he would receive 132% of his PIA every month for the rest of his life. For this specific example, there is a 76% difference between Jack claiming at age 62 and waiting to claim until age 70. That is a lot of money!
When Should I Claim?
That is a big question and an important one! Although claiming at age 70 entitles you to the maximum monthly payment, that does not necessarily mean it is the right decision for you. There are many factors to consider when choosing a claiming strategy. A Registered Social Security Analyst (RSSA) is a professional who can help you make the optimal decision. Get help today.