When claiming Social Security benefits early, what is the adjustment to the benefits amount based on the standard FRA?

When someone decides to claim Social Security benefits before reaching their Full Retirement Age (FRA), their monthly benefit amount is reduced to account for the longer period over which they will be receiving those benefits. This reduction serves to maintain the overall financial integrity of the Social Security system.

Specifically, if an individual claims benefits at age 62, which is the earliest age they can claim benefits, the reduction is typically about 25-30% depending on their exact age of claiming relative to their FRA. For most people born in the early 1960s, the FRA is around 67. Thus, if benefits are claimed early, such as at age 62, the reduction can indeed be around 30%.

This adjustment is crucial for understanding how benefit amounts are calculated and incentivizes individuals to consider waiting until their full retirement age to maximize their Social Security benefits. By understanding this concept, individuals can make more informed decisions about when to begin receiving benefits, balancing immediate financial needs against long-term financial security.