Your monthly Social Security retirement benefit is calculated using your highest 35 years of inflation-adjusted earnings, a specific formula, and your age when you begin receiving benefits.
The Social Security Administration (SSA) determines your retirement benefit by first calculating your average indexed monthly earnings (AIME) over your highest 35 years of earnings. These earnings are adjusted for inflation to reflect their value in today's dollars. Then, a formula is applied to your AIME to arrive at your primary insurance amount (PIA), which is the benefit you would receive at your full retirement age. Finally, your benefit amount is adjusted based on whether you start receiving benefits before, at, or after your full retirement age.
This information provides a general overview of how Social Security retirement benefits are calculated and does not constitute financial advice.
What is the earliest and latest age I can claim Social Security retirement benefits?
The earliest age at which you can claim Social Security retirement benefits is 62. However, claiming at age 62 means your monthly benefit will be permanently reduced. For example, if your full retirement age is 67, claiming at 62 could reduce your benefit by up to 30%. The latest age at which you can claim retirement benefits and continue to earn delayed retirement credits is age 70. After age 70, your benefit amount will not increase further, even if you continue to delay claiming. Therefore, age 70 is generally considered the optimal age to claim if you are able to wait and maximize your lifetime benefits.