§ 604. Social Security Benefit Calculation - Effect on Benefits of the Timing of Application


All benefits for which entitlement depends in part on attainment of a certain age set the monthly benefit amount in terms of the Social Security Act's "full retirement age" (which is between 65 and 67 depending on year of birth). Benefits that are first claimed prior to the Act's "full retirement age" are reduced to take account of the longer period over which they may be received. The benefit types subject to such an actuarial reduction include old-age insurance (retirement) benefits and spouse benefits including those for divorced spouses.

The calculation of this "actuarial reduction" is somewhat different for each of the benefit types. In all cases the amount of reduction is based on the number of months prior to the individual's "full retirement age" for which benefits are claimed. For old-age insurance benefits the reduction is 5/9 of 1% for each month up to 36, plus 5/12 of 1% for each additional month. Since old-age or retirement benefits can be claimed as early as age 62, the maximum reduction under this formula is 20% for those whose "full retirement age" is 65, and it will be 30% for those whose "full retirement age" is 67. The comparable formula for the spouse of an old-age or disability benefit recipient is 25/36 of 1% for each month up to 36, plus 5/12 of 1% for each additional month. Since spouse benefits of this type can be claimed as early as age 62, the maximum reduction under this formula is 25% for those whose "full retirement age" is 65, 35% for those whose "full retirement age" is 67. Finally, for a surviving spouse, who can claim benefits as early as age 60, a still different formula yields a maximum reduction of 28.5%. The same maximum reduction applies to those surviving spouses who are entitled to benefits prior to age 60 because of disability. In other words, there is no additional reduction even though benefits in such cases may begin as early as age 50. Similarly there is no reduction for periods in which a spouse is eligible for benefits because he or she is caring for a child entitled to child benefits.

At the Act's "full retirement age," a claimant's "actuarial reduction" is recalculated if there were months in the period prior to that age in which benefits were not received because of excess earnings. Such months are removed from those used to calculate the reduction amount.

For old-age insurance benefits (but not spouse benefits) there is also an adjustment for individuals who postpone claiming benefits until months or years after the Act's "full retirement age." These "delayed retirement credits" are not available for months beyond age 70. The Act's credit for delaying old-age benefits after its "full retirement age" is programmed to increase. For workers reaching age 65 in 1990, the credit was 3.5% per year of delay. In successive even numbered years (1992, 1994, and so on) the credit rose .5%. It leveled off at 8% for those turning 65 in 2008 and thereafter.

Rev. 5/10

  • Related Sections:
    • Part 1
      § 300. Basic Elements of Coverage
      § 600. Social Security Benefit Calculation - In General
      § 601. Social Security Benefit Calculation - The Role of the Primary Insurance Amount
      § 602. Social Security Benefit Calculation - Calculating the Primary Insurance Amount
      § 603. Social Security Benefit Calculation - Shares of the Primary Insurance Amount
      § 605. Social Security Benefit Calculation - Effect on Benefits of Continuing Earned Income
      § 606. Social Security Benefit Calculation - Effect on Benefits of Benefits Being Received by Others
      § 610. Events Causing Loss or Reduction of Benefits