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If I start collecting reduced Social Security benefits early, will my payment increase when I reach full retirement age?

Contrary to what many people think, your payment will not automatically increase to 100 percent of your full retirement benefit when you reach full retirement age.

The financial implications are significant. If your full retirement age is 67 and you claim Social Security at 62, your monthly benefit will be reduced by 30 percent — permanently. File at 65 and you lose 13.33 percent — again, permanently. If your full retirement benefit is $1,500 a month, over 20 years that 13.33 percent penalty adds up to nearly $48,000. Social Security’s Early or Late Retirement? calculator can give you a sense of the financial impact of claiming benefits at various ages.

If you develop filer’s remorse, Social Security gives you 12 months from the date you applied for retirement benefits to change your mind and cancel that initial claim. You’ll have to repay what Social Security has already paid you (and what it has paid your spouse and kids, if they’re collecting family benefits on your record), but this way you can refile later at full retirement age and get your full benefit.

There is one circumstance in which Social Security raises your payment at full retirement age, although probably not to 100 percent of your full benefit. That’s if they withheld some of your benefits during early retirement because you had work income that exceeded Social Security’s earnings limit. In this case, they recalculate your benefit at full retirement age to help you recoup those losses.

Keep in mind

Published October 10, 2018

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