What is the impact on benefits for claiming Social Security before full retirement age?

Claiming Social Security benefits before reaching full retirement age results in a permanent reduction in the monthly benefit amount. Specifically, for each month you claim benefits before this age, your benefits could decrease by a certain percentage, which is calculated based on the number of months you receive them early. This reduction applies continuously, meaning that individuals who decide to take their benefits early will receive lower payments not just during their early claiming years but for the entirety of their retirement.

The reduction is designed to account for the longer duration over which benefits will be paid. For example, if someone elects to start receiving benefits at age 62, and their full retirement age is 66, they can expect their monthly payment to be reduced permanently by a fixed percentage each month they claim early. Therefore, this option accurately represents the consequences of claiming benefits early.

Understanding this aspect of Social Security can help individuals make informed decisions regarding their retirement strategy, weighing the immediate need for income against the long-term impact on their total benefit amount.