The amount of your retirement benefit is determined by how much you earned over your lifetime at employment over which you contributed Social Security taxes — as well as the age at which you claim. You can apply for Social Security benefits as early as the age of 62, but you won’t receive your maximum benefit amount unless you wait until you reach full retirement age (FRA).
If you were born between both 1943 and 1954, your total retirement age is 66, based on the Social Security Administration (SSA). A hypothetical $1000 retirement payout would be cut by 25% if you claimed at the age of 62, and you’d only receive $750 each month. A monthly spousal benefit of $500 would be cut to $350.
The wider the age difference between 62 and FRA, the greater the proportion of retirement benefits reduced. Retirement benefits are lowered by 30% for people born in 1960 or later, while spousal benefits are decreased by 35%. This means that a $1000 monthly retirement payment would be cut to $700.
The monthly benefit rate for retired workers getting benefits at the age of 62 earned the average pay was $1,480 per month a person alone, according to the SSA’s 2021 Annual Statistical Supplement. At age 62, the benefit amount for employees with spouses collecting benefits was $2,170.
In May 2022, the typical Social Security retirement payment was $1,668 per month. For someone who applies for Social Security in 2022 at full retirement age (FRA), that age during which you become eligible for 100 percent of the benefit based on your earnings history, the maximum benefit — the most a single retiree can receive — is $3,345 per month. For individuals who were born in 1956, the FRA is 66 and 4 months, and it gradually increases to 67 for those who were born in 1960 or later.
There really are ways to acquire a general idea of your own amount before applying, however, you won’t know it for sure until then. Use the Social Security Benefits Calculator provided by AARP or check you’re online My Social Security account for the quickest and easiest results. The AARP calculator requires your average yearly salary, while the latter uses your earnings history on record with the Social Security Administration.
Both calculators estimate the monthly payments you could receive if you begin collecting Social Security at age 62, the earlier age at which you can apply for retirement benefits, at full retirement age, and at age 70. Social Security penalizes you for filing early between 62 and FRA; from FRA and 70, it rewards you for waiting by increasing your pension.
According to the AARP calculator, a person who was born on January 1, 1960, and who has earned an average of $50,000 per year, will receive a monthly benefit of $1,338 if they apply for Social Security at age 62, $1,911 when they reach full retirement age (in this case, age 67), or $2,370 when they turn 70. The AARP tool may also provide numbers for every age in between, assess the impact of working longer on your benefits and assist you in creating a budget for your later years of life.
Call the Social Security Administration at 800-772-1213 for a basic benefit estimate. No issue with where you got the data from, keep in mind that these are estimates and not guarantees.
How much money does one lose if one retires at the age of 62?
A worker has the option to retire as early as age 62, although doing so may result in a 30 percent pay cut. Receiving benefits after the standard age of retirement may result in bigger payouts.
Why is it a good idea to retire at the age of 62?
The fact that your obligations are completely off, or are almost so, is probably the most telling sign that it’s safe to retire early. Debt-free living, financial freedom, or whatever term you want, means you’ve met all or most of your responsibilities and will be significantly less stressed in the coming years.
Keep in mind
Social Security has a limit on the portion of income it considers when calculating your payment. The cap is $147,000 in 2023 (it is modified yearly to reflect historical salary patterns). Any additional income is not considered in your benefit computation (and is also not subject to Social Security taxes).