Social Security and Retiring at 54

[MasterBlaster]

Well, if I work 3 more years I will have 40 years of employment history but be 9 yrs + 4 mo's below full retirement age. So do I reduce it, or no? Or maybe I split the difference? My benefit at age 62 would be less than what it says on my mailed estimate, but not 9.3% less.

As I understand it SS is based on your best 40 year work history. More than that doesn't get you anything better.

However, If the first several years were in a job that didn't pay so well, then by working extra years at that MegaCorp job will bump some of the lower paid years to your (slight) benefit.

As others have pointed out earnings from past years are wage-inflation adjusted. So it's the real earnings not the nominal non-inflation earnings that matter.

 

[REWahoo]

As I understand it SS is based on your best 40 year work history.

To be more precise, "...Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most."

Your Retirement Benefit: How It Is Figured (2010)

 

[MasterBlaster]

To be more precise, "...Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most."

Your Retirement Benefit: How It Is Figured (2010)

OK - I stand corrected - best 35 years it is.

 

[misanman]

Once you've calculated your benefit at full retirement I believe it is a 25% reduction to retire at 62. At least is is for me.

 

[MasterBlaster]

Once you've calculated your benefit at full retirement I believe it is a 25% reduction to retire at 62. At least is is for me.

It depends on your full retirement age. If I recall correctly they take off exactly 8 % a year for every year you retire early.

 

[REWahoo]

It depends on your full retirement age. If I recall correctly they take off exactly 8 % a year for every year you retire early.

It does depend on your full retirement age -which varies depending on your year of birth. The amount of reduction for retiring at 62 isn't 8% per year. It varies from 25% for those born between 1943-54 to 30% for those born in 1960 or later.

Retirement benefits by year of birth

 

[Nords]

It does depend on your full retirement age -which varies depending on your year of birth. The amount of reduction for retiring at 62 isn't 8% per year. It varies from 25% for those born between 1943-54 to 30% for those born in 1960 or later.

It's not the SSA, it's Scott Burns.

He's used the analogy that every year of delaying SS is the equivalent of earning an 8% yield on the SS that will eventually be received.

 

[MasterBlaster]

8 Percent

Ah - I see my confusion.

The 8% per year is the extra amount you get for delaying retirement past your full retirement age until 70 years old. That assumes you were born in 1943 or later.

here's the link from the SS website:

Answer