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Considering Drawing Benefits at Age 62? Here’s Something More to Think About.

The earliest year of Social Security eligibility is age 62. Most folks approaching that age know this, and it is still the most popular age for initial filing. But one thing that tends to get lost in the excitement of starting to receive that earned benefit is the permanency of the lower monthly amount, although Social Security personnel appear to be pretty clear on that factor these days. Beyond that, though, is another more subtle piece of the equation that may not be as clearly understood, and it relates to the relatively complex nature of the process that determines one’s primary insurance amount (PIA)–the full benefit available to you at full retirement age (66 or 67, depending on birth year).

For some filers, particularly those in careers that have seen much higher wages in the later years compared to their earlier years, filing earlier than full retirement age can preclude the ability to have these higher-earning years offset lower earnings in their earning records, resulting in a bit of suppression in the average indexed monthly earnings portion of their benefit calculation. The Motley Fool’s Keith Speights, in a post on their website, explains this impact and another significant “penalty” often associated with early filing. Check it out here.

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