Retirement benefits are available to four classes of people: workers, spouses, children, and single parents that have a child under the age of sixteen.

Worker’s benefit:. Workers may receive retirement benefits beginning at age sixty-two or beginning at any month between the time they turn age sixty-two and the time they reach full retirement age. However, if workers choose to receive benefits before they reach the FRA, the amount of benefits will be permanently reduced, depending on how many months in advance of the FRA the benefits are received. Individuals that choose to receive retirement benefits more than three years before they reach full retirement age will receive benefits that are reduced by a maximum of 20 percent per year for the first three years, or 5/9 percent per month. Reductions of 5 percent per year apply after the individual reaches age sixty-five.

For example, if your full retirement age is sixty-six, and you begin retirement at age sixty-two, your benefits will be reduced by 20 percent for the first three years and 5 percent for the fourth year; your benefits will be reduced by 25 percent total.

Delaying benefits beyond the full retirement age results in a benefit increase for each month beyond your FRA that you do not receive benefits. You may delay benefits until you reach age seventy, and you will receive credits amounting to a specific percentage increase for each year of delay, as shown in Table 28.4. For example, if your FRA is sixty-seven, and you begin receiving benefits at age seventy, your PIA will be increased by 24 percent (three years times 8 percent).

Table 28.4

Year Born	Percentage Increase
1935–36	6.0%
1937–38	6.5%
1939–40	7.0%
1941–42	7.5%
1943 or later	8.0%

 

You may work while you are receiving benefits. Earnings that you receive during or after the month in which you reach full retirement age will not reduce your Social Security benefits. However, if you choose to continue working while receiving benefits before your full retirement age, your benefits will be reduced. In 2006, earnings you receive in the year you reach your FRA will be reduced by $1 in benefits for every $3 you earn above the annual limit of $32,240; your earnings will only be reduced until the month you reach full retirement age. In the years before you reach full retirement age, your earnings will be reduced by $1 in benefits for each $2 you earn above the limit ($12,480 in 2006). Note that these limits change each year.

Spouse’s benefit: The spouse of a fully insured worker is eligible to receive a retirement benefit of 50 percent of the worker’s PIA (this benefit is subject to the family maximum). This benefit is reduced by up to 25 percent for three years if the spouse has not reached his or her FRA. Once the spouse has reached age sixty-five, a reduction of 5/12 percent per month, or 5 percent per year, is imposed for each of the remaining months the spouse is below the FRA. Any reductions to the worker’s benefit resulting from early retirement will not affect the amount of the spouse’s retirement benefit. If a spouse is entitled to benefits from his or her own employment, that spouse will receive 100 percent of his or her own PIA if that amount is higher than 50 percent of the other spouse’s PIA. If 50 percent of the other spouse’s PIA is higher, that benefit will be awarded instead.

Child’s benefit: Any child who is under eighteen (nineteen, if the child is still in high school), is eligible to receive a benefit of 50 percent of the retired worker’s PIA (this amount is subject to a family maximum).

Mother’s or father’s benefit: The spouse of a fully or currently insured worker is eligible to receive a benefit of 75 percent of the worker’s PIA if the spouse is caring for a child under age sixteen or a child who was disabled before age twenty-two.

 

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