SOCIAL SECURITY

Fact Sheet

The Social Security Amendments of 1983 (H.R. 1900, Public Law 98-21) contained two provisions which may have an impact on when an individual decides to retire. The two provisions are an increase in the retirement age that can first affect individuals retiring in 2000 and an increase in the delayed retirement credit for those who work beyond full retirement age. 

Delayed Retirement Credits

• Social Security benefits are increased (by a certain percentage depending on a person’s date of birth) if retirement is delayed beyond full retirement age.
• The benefit increase stops when a person reaches age 70, even if they continue to delay taking benefits.

• Background
  • A provision allowing for a 1% credit a year for delaying retirement past age 65, up to age 72, was first enacted as part of the 1972 Amendments. It was increased to 3% a year in the 1977 Amendments.
  • The 1983 Amendments phased in an increase in the percentage, based on a person’s date of birth, and lowered the age at which the increase no longer applied to 70 (to correspond to the age of 70 at which the earnings test no longer applies).

The earliest a person can start receiving Social Security retirement benefits will remain age 62.

• Social Security benefits are reduced for each month a person receives benefits before full retirement age.
  • For persons whose full retirement age is 65, a retirement benefit is reduced by ⁵/₉ of 1% for each month of benefits prior to full retirement age.
• As the age for collecting full Social Security benefits increases, persons who retire at age 62 will see a greater reduction in their Social Security benefits.
  • For persons whose full retirement age is age 65 and 2 months or later, a retirement benefit will be reduced by ⁵/₉ of 1% for each month up to the first 36 months of benefits before full retirement age, plus ⁵/₁₂ of 1% for each month of benefits in excess of 36 prior to full retirement age.
  • Examples:
    • Social Security benefits are reduced by 20% for a person who retires at 62 whose full retirement age is 65 (born 1937 or earlier).
    • Social Security benefits will be reduced by 20⁵/₆% for a person whose full retirement age is 65 and 2 months (retires at 62 in 2000).
    • Social Security benefits will be reduced by 25% for a person who retires at 62 whose full retirement age is 66 (born 1943-1954).
    • Social Security benefits will be reduced by 30% for a person who retires at 62 whose full retirement age is 67 (born in 1960 or later).
• Background
  • The Social Security Amendments of 1956 lowered the minimum age for retirement benefits to 62 for women.
  • The Social Security Amendments of 1961 extended the early retirement provision to men.

The new Social Security Statement:

• Tells a person their full retirement age and
• Provides a retirement benefit estimate for age 62, full retirement age, and age 70.
  • The age 62 benefit estimate incorporates the reduction for early retirement.
  • The age 70 benefit estimate incorporates delayed retirement credits.