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Benefit Reduction for Early Retirement

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Early or Delayed Retirement

Spousal benefits

We sometimes call a retired worker the primary beneficiary, because it is upon his/her primary insurance amount that all dependent and survivor benefits are based. If the primary begins to receive benefits at his/her normal (or full) retirement age, the primary will receive 100 percent of the primary insurance amount. If the spouse of a primary begins to receive benefits at his/her normal retirement age, the spouse will receive 50 percent of the primary's primary insurance amount.

The table below illustrates the effect of early retirement, for both a retired worker and his/her spouse. For our illustration, we have used a $1,000 primary insurance amount. With this primary insurance amount and both primary and spouse retiring at their respective normal retirement ages, the primary would receive $1,000 per month and his/her spouse would receive $500 per month. The table shows that retirement at age 62 results in substantial reductions in monthly benefits. Please note that relatively few people can begin receiving a benefit at exact age 62 because a person must be 62 throughout the first month of retirement. Thus most early retirees begin at age 62 and 1 month.

Primary and spousal benefits at age 62
(benefits based on a $1,000 primary insurance amount)
Year of
birth a
Normal (or full)
retirement
age
Number of
reduction
months b
Primary Spouse
Amount Percent
reduction c
Amount Percent
reduction d
1937 or earlier 65 36 $800 20.00% $375 25.00%
1938 65 and 2 months 38 791 20.83% 370 25.83%
1939 65 and 4 months 40 783 21.67% 366 26.67%
1940 65 and 6 months 42 775 22.50% 362 27.50%
1941 65 and 8 months 44 766 23.33% 358 28.33%
1942 65 and 10 months 46 758 24.17% 354 29.17%
1943-1954 66 48 750 25.00% 350 30.00%
1955 66 and 2 months 50 741 25.83% 345 30.83%
1956 66 and 4 months 52 733 26.67% 341 31.67%
1957 66 and 6 months 54 725 27.50% 337 32.50%
1958 66 and 8 months 56 716 28.33% 333 33.33%
1959 66 and 10 months 58 708 29.17% 329 34.17%
1960 and later 67 60 700 30.00% 325 35.00%
a If you are born on January 1, use the prior year of birth.
b Applies only if you are born on the 2nd of the month; otherwise the number of reduction months is one less than the number shown.
c Reduction applied to primary insurance amount ($1,000 in this example). The percentage reduction is 5/9 of 1% per month for the first 36 months and 5/12 of 1% for each additional month.
d Reduction applied to $500, which is 50% of the primary insurance amount in this example. The percentage reduction is 25/36 of 1% per month for the first 36 months and 5/12 of 1% for each additional month.
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Last reviewed or modified Wednesday May 28, 2008
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