Source: From the AARP Bulletin print edition | July 1, 2009 (taken from http://bulletin.aarp.org/yourmoney/socialsecurity/articles/kn07_experts.html)
 

Q. I’m 55 and about to retire. I plan to file for Social Security benefits when I reach 62. Will my benefit be reduced because I’m not earning wages for seven years until then?

A. Perhaps. Social Security benefits are based on your average monthly earnings during the 35 years in which you earned the most. If you continued working past age 55, and your seven years between ages 55 and 62 were high earnings years, those earnings could replace earlier lower-wage years. That might raise your average earnings and possibly increase your benefit.

Another factor to consider: If you collect your benefit early, you’ll receive about 30 percent less than if you wait until your full retirement age.

To find out more, see “Your Retirement Benefit: How It Is Figured."