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How Can The Actuarial Reduction For Social Security Early Retirement Be Right?

Author

Listed:
  • Natalia A. Jivan

    (Center for Retirement Research at Boston College)

Abstract

Traditionally Social Security's Normal Retirement Age has been 65, but for the last 45 years both men and women have had the option to claim benefits at the Early Eligibility Age(EEA)of 62. In exchange for claiming early, individuals receive a smaller monthly benefit. The legislation that established the EEA reduced benefits by 5/9 of 1 percent for each month before age 65, so that a person claiming at age 62 would face a 20 percent [(5/9)*36] reduction. This publication explains the factor of 5/9 and why it has remained constant since the establishment of the EEA.

Suggested Citation

  • Natalia A. Jivan, 2004. "How Can The Actuarial Reduction For Social Security Early Retirement Be Right?," Just the Facts jtf11, Center for Retirement Research.
    • Handle: RePEc:crr:jusfac:jtf11
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    File URL: http://crr.bc.edu/briefs/how-can-the-actuarial-reduction-for-social-security-early-retirement-be-right/
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    Cited by:

    1. Frank W. Heiland & Na Yin, 2014. "Have We Finally Achieved Actuarial Fairness of Social Security Retirement Benefits and Will It Last?," Working Papers wp307, University of Michigan, Michigan Retirement Research Center.
    2. John Shoven & Sita Slavov, 2013. "Recent Changes In The Gains From Delaying Social Security," Discussion Papers 13-019, Stanford Institute for Economic Policy Research.

    More about this item

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H - Public Economics

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