Social Security benefits shrink up to 30% when claimed at age 62

The United States Social Security Administration calculates retirement benefits based on earnings history and a full retirement age (FRA) of 67 for people born in 1960 or later. Claiming benefits early, at age 62, reduces monthly checks by 5/9 of 1 percent per month for the first 36 months and then by 5/12 of 1 percent per month thereafter, resulting in a permanent reduction of up to 30% compared with waiting until the FRA.

Financial planners note that while early claiming provides more checks overall, the lower monthly amount can cost retirees tens of thousands of dollars over a typical retirement span. For example, a retiree with an average monthly benefit of $2,071 at age 67 would receive about $1,449 per month at age 62, a loss of $621 per month or roughly $7,455 per year. Over a 23‑year retirement period, the total shortfall could exceed $400,000. Advisers suggest using personal savings or a small pension to bridge the five‑year gap until the larger benefit becomes available, especially for those with longer life expectancies or sufficient assets.