Ask Larry

If I Take Social Security At Age 63 At A Reduced Rate, Will My Rate Go Back Up To The Full Amount At My Full Retirement Age?

Hi, if i take social security benefits at 63 at reduced rates, do my benifits go back to full rate when i am at full retirement age?
Jim

Hi Jim,

No. If you start collecting benefits prior to full retirement age (FRA) the reduction for age that's applied is permanent, assuming that you're paid all of your benefits prior to FRA. However, if any of your benefits are withheld because of Social Security's earnings test (https://www.ssa.gov/benefits/retirement/planner/whileworking.html), then your benefit rate would be adjusted effective at your FRA to remove at least some of the age reduction.

For example, say Bill files for his Social Security retirement benefits this year at age 63. Bill's full retirement age rate, or primary insurance amount (PIA), is $1500, but since he's electing to start drawing his benefits early Bill's benefit rate is reduced to $1162. However, Bill is still working and because of his earnings, half of Bill's benefits are withheld due to between the time he starts drawing benefits and when he reaches FRA. As a result, effective with the month Bill reaches FRA his benefit rate would be adjusted to remove half of the reduction for age that was originally applied to his benefit rate, increasing his benefit rate from $1162 to $1325. But, if none of Bill's benefits had been withheld, then the original reduction for age that was applied to his benefit rate would be permanent and he would not get a rate adjustment at FRA.

Best, Jerry

Posted: 
Sep 23 2020 - 5:19pm
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