Ask Bob: How Much Does Social Security Increase Each Year After Age 62?

If you claim Social Security at age 62, rather than waiting until your full retirement age (FRA), you can expect up to a 30% reduction in monthly benefits. For every year you delay past your FRA up to age 70, you get an 8% increase in your benefit.
Author:
Publish date:

Question

I keep reading and hearing about the longer you wait to take Social Security payments, the more you will get. But does that only mean if you continue to work and receive at least the same salary? What if I quit work at 62, but then delay taking the benefit until 67? Does the monthly benefit increase from 62 till 67 or even 70, even if I am not working those years?

Answer

You are absolutely correct, says Rich Allridge, CFP, with Allridge Wealth Management. “The longer you wait after your full retirement age or FRA to take Social Security the more you will receive despite being retired,” he says. “In fact, for those born after 1943, the annual increase in benefits is 8% for each year you delay until age 70.” Your FRA will be based upon when you were born and can be found at ssa.gov.

How is that full retirement age benefit calculated? “The benefit will be based upon a formula set forth by the Social Security Administration,” says Allridge. They take each year of earnings throughout your working lifetime and adjust for variables such as inflation. The formula will use your highest 35 years of earnings capped at a certain dollar amount each year. For 2020 that number is $137,700. “If you choose to retire at 62 your full retirement age benefit will be based upon the highest 35 years of earnings at that point,” he notes. Your full retirement age benefit would not dramatically change from that point on; it would essentially be frozen. Your increase or decrease to that full retirement age benefit would be based upon that calculation at age 62.

Should you choose to start taking benefits when you retire at 62, you would be receiving a reduced amount of your FRA benefit. “Conversely,” Allridge says,” you would be eligible for an increased amount each year you delay after your full retirement age until 70.”

Got questions? Get answers!

Got questions about Social Security, Medicare, retirement, investments, or money in general? Get answers. Email Robert.Powell@Maven.io. Kim McSheridan assisted with this report. 

Question

I keep reading and hearing about the longer you wait to take Social Security payments, the more you will get. But does that only mean if you continue to work and receive at least the same salary? What if I quit work at 62, but then delay taking the benefit until 67? Does the monthly benefit increase from 62 till 67 or even 70, even if I am not working those years?

Member Exclusive

Get Access to Our Exclusive Content