Filing for Social Security early in retirement affects how much you’ll receive in monthly benefits. Individuals can begin collecting as early as age 62, but doing so triggers a permanent reduction compared to waiting until full retirement age. The percentage of reduction depends on your birth year and how many months early you claim. Understanding how the Social Security Administration calculates this reduction can help you compare potential benefit amounts.
Schedule a meeting with a financial advisor to review how Social Security can be part of your retirement plan.
How Is Social Security Calculated?
The Social Security Administration runs this national social insurance program, which provides financial support to more than 73 million retirees, disabled workers, surviving spouses, ex-spouses and children of older or deceased parents.
To qualify for Social Security retirement benefits, you must work and pay payroll taxes for at least 10 years. Beyond that, three figures – your income, number of years working and age at claiming — determine how much you are eligible to get once you elect to start receiving your Social Security benefits.
Your benefit amount is based on your Average Indexed Monthly Earnings (AIME), which reflects your 35 highest-earning years, adjusted for wage inflation. If you worked fewer than 35 years, zeros are factored in for the missing years, which lowers your average.
The AIME is then applied to a formula that yields your Primary Insurance Amount (PIA), which is the monthly benefit you’d receive at full retirement age. This formula uses progressive bend points, meaning lower portions of your income are replaced at higher rates. Finally, the age at which you claim benefits adjusts the PIA up or down.
Early Retirement and Social Security
Claiming Social Security before full retirement age, which for most people is 67, means you’ll see your benefit permanently reduced. Waiting to claim benefits after full retirement age, on the other hand, means your benefits will be increased.
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. In fact, your eligible benefit increases every year you wait after turning 62 and until your 70th birthday.
This chart lays out how it works for someone with a full retirement age of 67:
| Claiming Age | Benefit Adjustment |
| 62 | -30% |
| 63 | -25% |
| 64 | -20% |
| 65 | -13.3% |
| 66 | -6.7% |
| 67 | 0% |
| 68 | +8% |
| 69 | +16% |
| 70 | +24% |
Your claiming age affects not just monthly payments but also your total lifetime benefits, based on average life expectancy. Again, the longer you wait, the more you get.
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What Is the Maximum Social Security Benefit at Age 62?
In 2025, individuals who begin collecting Social Security benefits at age 62 can receive a maximum monthly payment of $2,831. This amount is lower than the maximum benefit at full retirement age due to early retirement reductions.
The maximum benefit for those retiring at full retirement age in 2025 is $4,018 per month. Meanwhile, delaying benefits until age 70 increases the maximum monthly payment to $5,108.
These figures apply to individuals who consistently earn at or above the maximum taxable earnings limit throughout their careers. It’s also worth noting that these maximum benefit amounts are adjusted annually based on cost-of-living adjustments (COLAs).
Early Retirement Benefit Example
To see how this might work in real life, consider the hypothetical case of John, who retires and claims Social Security at 62. John’s full retirement age is 67, when he’ll be eligible for $2,000 per month.
Since retiring at 62 means a 30% reduction in monthly benefits, he’ll receive $2,000 minus 30% of $2,000 or $1,400 per month. This means he receives $600 less per month than if he had waited until his full retirement age.
Importantly, this reduction remains fixed for life. For as long as he lives and receives Social Security, his benefits will reflect this $600 monthly penalty. Annual inflation adjustments may raise the check amount, but it will always be $600 less, adjusted for inflation. Also note that this reduction affects any benefits paid to a surviving spouse by Social Security after he dies.
There’s also an impact on his total lifetime benefits. If John lives to 85, he collects $45,600 less by claiming at 62 than he would by waiting until 67. Retiring at 62 means getting $1,400 a month for 23 years, a total of $386,400. If he waited until 67, he’d get $2,000 monthly for 18 years or $432,000. By waiting until age 70, John would receive $2,480 per month for 15 years or $446,400 over his lifetime, which is $60,000 more than he’d get by claiming at age 62.
Bottom Line
Deciding when to claim Social Security retirement benefits calls for carefully evaluating the financial impacts of retirement age on the monthly and total lifetime amount of eligible benefits. While early retirement offers plenty of appeal, it also may involve significant financial penalties.
Tips for Retirement
- To get a more complete understanding of how early retirement could affect your personal situation, consult a financial advisor. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Social Security can seem like something of a black box, but SmartAsset’s Social Security Calculator gives you a look inside. Input your birth year, income and the age you expect to start receiving benefits. You’ll instantly see your projected monthly and annual benefit amounts.
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