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Early Social Security Disbursement: An FAQ

social security WEP provision benefits SS working earning investing benefitsBy – Molly Bond, Advocacy & Public Policy Coordinator, American Booksellers Association

As a result of the COVID-19 outbreak, the American Booksellers Association has heard from members all around the country who are struggling financially, including those who are near retirement age (between the ages of 62 and 70). If you are in this age group, you may be considering how early Social Security retirement benefits might play a role in easing your current financial uncertainty.

In response to member inquiries following a New York Times article on Social Security, ABA’s Advocacy team reached out to Russell Gloor at the Association of Mature American Citizens (AMAC) Foundation, who has a wealth of knowledge in regards to Social Security. The following information pulls heavily from information provided by Gloor and the previously mentioned New York Times article.

Note: The decision to claim Social Security retirement benefits early is a personal decision. There is no one-size-fits-all approach. Carefully review your financial situation and consider consulting with a financial advisor before making a decision, as a delay in claiming Social Security retirement benefits can substantially increase your retirement income.

When am I eligible for Social Security retirement benefits?

You become entitled to full (unreduced) Social Security retirement benefits at full retirement age. Your full retirement age varies depending on the year in which you were born. Find your full retirement age here. Regardless of your full retirement age, you may start receiving benefits as early as age 62 or as late as age 70.

Will my benefits be reduced if I claim Social Security retirement benefits before my full retirement age?

Yes. If you start taking your Social Security retirement benefits before your full retirement age, your benefits are reduced for each month before your full retirement age. In other words, your annual benefit will be higher for every year you wait, until age 70. Filing before your full retirement age can decrease your benefits by as much as 6.7 percent annually. The maximum reduction at age 62 will be 25 percent for those who reached age 62 in 2013 and 30 percent for those born after 1959.

For example, if you were born 1957, your full retirement age is 66 and 6 months. An estimated monthly benefit of $1000 at full retirement age would be reduced to $725, by 27.50 percent. You can select your year of birth to find out how much your benefit will be reduced if you retire between age 62 and full retirement age.

Inversely, claiming Social Security retirement benefits after your full retirement age results in a larger benefit: an 8 percent increase for every 12 months of delay up to age 70.

If I choose to take Social Security retirement benefits before full retirement age, how can I maximize my lifetime benefits?

If you are considering claiming Social Security retirement benefits before full retirement age due to short-term COVID-19-induced financial hardship, you have the option to claim benefits now and then suspend them once you reach full retirement age. If you do this, you will accrue delayed retirement credits.

Keep in mind that claiming Social Security retirement benefits early, even if you then later suspend them, will still reduce your lifetime benefits. For example, if you claim early at age 62 with a full retirement age of 67, you will get a benefit 30 percent less than you would get at age 67; that reduction will stay in place even if you later suspend your benefits at full retirement age and subsequently earn delayed retirement credits until age 70. While your age 70 benefit will be more than your age 62 benefit, the increase will be considerably less than it would have been if you did not take your benefits early.

Additionally, if you are still working, you need to consider Social Security’s earnings test (see section below).

Are there other consequences to suspending Social Security retirement benefits?

Yes. Suspending Social Security retirement benefits at your full retirement age also means that the benefits anyone else (such as a spouse or dependent child) is collecting on that record would also be suspended. In other words, suspending your Social Security retirement benefit at full retirement age also suspends benefits for anyone else collecting benefits on your record. This could be the case if the Social Security retirement benefit taken early results in a spousal benefit being paid to a spouse, or a dependent child benefit to be paid, only to have those benefits cease when the Social Security retirement benefit is suspended.

Can I suspend spousal and survivor benefits as well as retirement benefits?

No. The option to suspend benefits applies only to Social Security retirement benefits that are based on your work record. It would not apply to either spousal or survivor benefits.

For example, a widow who is waiting until her full retirement age to claim 100 percent of her survivor benefit cannot, instead, claim a reduced survivor benefit earlier and then suspend benefits at her full retirement age and expect a larger survivor benefit later.

Can I claim Social Security retirement benefits before my full retirement age while I am still working?

Yes, but you will be subject to a Social Security earnings test. This earnings test sets a limit on how much you can earn before Social Security takes back some of your benefits.

If you are under full retirement age for the entire year, the Social Security Administration will deduct $1 from your benefit payments for every $2 you earn above the annual limit of $18,240 for 2020. If your benefits are withheld because you exceed the earnings limit, you will see a benefit increase when you reach full retirement age; however, it will take many years (up to 15) to recover any benefits withheld due to exceeding the earnings limit while collecting early benefits.

If you will reach full retirement age in 2020, the annual limit on your earnings for the months before full retirement age is $48,600 for 2020. In those months before you reach full retirement age, the Social Security Administration will deduct $1 from your benefit payments for every $3 you earn above the annual limit of $48,600. Starting with the month you reach full retirement age, your earnings no longer reduce your benefits, regardless of how much you earn.

In summary, there are a number of complications you must consider when deciding to claim Social Security retirement benefits before full retirement age. The right choice is dependent upon your individual circumstances.

If you have Social Security-related questions, you can contact the AMAC Foundation’s Social Security Advisory Service at [email protected], or 1-888-750-2622.

Reprinted with permission of the American Booksellers Association.  Founded in 1900, the American Booksellers Association is a national not-for-profit trade organization that works to help independently owned bookstores grow and succeed. 

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2 years ago

Look those that are wealthy should not be getting S. S. I have even heard many say they are forced to take it they don’t need it I do remember way back even Bob Hope said it is a waist, we don’t need it keep it for those that worked but never made a million

James Slover
2 years ago
Reply to  Diana

Based on the entire world of 7 billion I am in the top ten percent but I am American so maybe top 5% (1 of 350,000,000). I am not wealthy as I own no real property except my car now. My health is cyclical and my wife was healthy but died of a rare cancer 9 months after a clean bill of health. I have grown children and family which is my true wealth. Working in a grocery store as sacker, cashier and grocery stocker have been my major income sources over 35 years that included many benefits. I am not rich in this world by the measuring standards of this world but was blessed with an awesome wife and friend. Social security helps but was never meant to be the entire retirement income. What you save and invest is what you retire on the social security income is the extra to help in rough times. I remember one man in my county was worth hundreds of millions of dollars. He was accused of paying no taxes for several years when he once ran for public office but the reason was his companies lost value of over $600,000,000. I cannot imagine losing one million much less $600 million. Some businesses are very risky and cyclical with hiring and lay offs, boom and bust cycles. I know of two truck drivers that worked oilfield that lost their jobs because of the economic downturn and were paid more during the boom than I ever earned. My younger sister lives from pension to pension check with social security but is always broke yet I bring home less than her from retirement sources but have fewer money issues.
Social security is taxed if you earn more than certain amounts but at age 70 the limits on what you can earn go away. I think avoiding probate is better than having many assets for lawyers and heirs to divide. In some cases a lawyer can take 40% of the assets as payment for legal fees.

Ed J
2 years ago

I waited until age 70 to begin taking my benefits and am glad I did so. My monthly check is more substantial than it would have been had I taken it earlier. In fact, it allows us to live comfortably. At full retirement age, my wife took social security based on my account, letting her account continue to accrue increasing benefits until age 70. She turns 70 this year, so she refiled with the Social Security Administration to switch her benefit from being based on my account to her account. Next month she will begin receiving a much higher monthly payment than she has been getting under my account. For us, this particular strategy has worked out very well. We both now receive the maximum benefits possible based on our individual earning histories.

I recognize that not everyone is similarly situated financially as we are and there may be a need to take your benefits at an earlier age due to financial necessity. The only thing to remember is that once you take your benefit, you are locked in for life. If you are in good health and getting along financially at this time, strongly consider delaying taking your benefit for as long as possible. Doing so will increase your monthly benefit going forward into your golden years.

James Slover
2 years ago
Reply to  Ed J

I chose widower/ survivor benefits based on my wife’s earnings when I turned age 60 it was less complicated than a partial disability that needed seasonal maintenance with constant medical evidence. My plan is survivor benefits for ten years then start my own earnings benefit at age 70 if it is greater. My ex daughter in law is convinced I will become a COVID-19 victim before age 70. I have already mimicked the Covid-19 symptoms by an anxiety asthma attack but every test was negative even no infection just inflammation with a high fever ending on my birthday. Actually I started early retirement with zero income retirement benefits at age 59 and moved before the local housing market crashed. Life is Interesting, politics is insane but I am trying to play my small part that is why I joined AMAC. Still trying to budget time and money (No thankyou is my newest best friend).

Shirl Daniels
2 years ago

Why not let the Coronavirus run it’s course and let business be business as usual. It seems to be that it’s bark is worse than it’s bite and common sense should prevail. These scare tactics are to me more a political ploy to drain the country’s coffers.

James Slover
2 years ago
Reply to  Shirl Daniels

Shirl Daniels I agree the 2 trillion plan went everywhere to raid the coffers of our treasury. I thought if the CDC did their original mandate to protect public health by fighting all contagious disease both viral and bacterial that $2 trillion would have made a nice huge endowment to fund CDC forever in research and upgrade medical facilities and labs to find therapeutics and vaccines. But politicians the most non essential of public servants chose pork projects to fund by selecting and defining essential jobs over non essential jobs — the House turned to socialism to make decisions and to pick winners and losers in our economy, many are now unemployed and the fear of disease is nearly worse than the disease itself. The $2 trillion helped some people but it is never enough. All jobs are essential to those earning the money from them. People need and want jobs and then there are some that want a handout check now instead but plan to wait to return to the workplace next year. Chicago rebuilt after the Chicago fires without the government assistance. Government help limits things while free market growth expands things.

2 years ago

I took my SS at 62 in 2001. I worked for 8 more years so the SS was just an added income. Now when I look back I would do the same since drawing it for the seven years before my full retirement made up for the difference. May not be the break even point but I enjoyed getting it.

James Slover
2 years ago
Reply to  BobA

Stay busy in retirement.

Rick B.
2 years ago

I took my early retirement when I turned 62 and have never regretted it. It’s about 75% of what my full retirement benefit would have been (at age 66) but I was drawing my reduced benefit for the FOUR YEARS in between. The cross-over break even point would be somewhere in my 90’s, certainly not at all guaranteed age I will attain, and even if I do I probably be drooling in my gruel anyway.
As long as there are issues with insolvency of the SSA fund, especially after Congress has filled warehouses full of IOU’s over the years by borrowing from it, my advice is a 75% bird in hand is worth two 100% birds in the bush.

Rick B.
2 years ago
Reply to  Rick B.

My wife is doing just the opposite. She started drawing a spousal benefit when she turned age 65 while she was still working. She has continued to draw that spousal benefit after her retirement, allowing her “full” benefit, based on her own employment record, to continue to accrue. She will probably switch to that significantly higher benefit sometime between the age 68 and 70.

Robin MacDonald
2 years ago

In regards to taking Social Security early. I am 63 years old, and a widow since Dec 1, 2019. My husband was 71 when he retired, and two years later came down with melanoma.
Fortunately we had taken out a life insurance policy for him of $75,000; so I have something to live off until I am 66. As a widow I can take full benefit on my 66th birthday. He also left me with two pensions that pay me 75% of what he was paid. If it weren’t for the life insurance I would have had to take a “widow’s “ benefit, which is substantially less than what I would get at 66.
He had life insurance at his work, but that went away when he retired. Starting a life insurance plan when you are 72 is pricey, but we just worked it into the budget, and I am so glad we did. It will work out so much better than drawing Social Security early.

Diane Cvengros
2 years ago

In 2014 I had to go on Disability age 61. Due to health issues due to a job I had worked previously, I couldn’t return to work, it had clsed down, I couldn’t do other work because of issues exacerbated by that job. I had no choice but to go on disability. I didn’t understand ay that time they were not going to give me my retirement money when I reached retirement age. I felt that to be unfair, especially since I couldn’t retire till age 70, due to a small investment. Now I am struggling to pay for health insurance, don’t want to rely on the government for full supplemental too. That insurance comes from a AARP United Healthcare provider which is increasing payment yearly, not sure why. I really feel I should be able to claim that. I didn’t know if I could claim on my husband’s, he is 7 years younger. It is very confusing.

John Wesley
2 years ago
Reply to  Diane Cvengros

I am sure you have legal advice. My suggestion is that you get some different legal advice.

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