How do I determine the expected benefit amount I will receive from Social Security if I retire at 59.5 years old instead of the projected 67 years old?
My Social Security statement calculates an expected benefit amount based upon my earnings history and the assumption that I will retire at age 67. How do I determine the expected benefit amount if I were to retire at 59.5 years old? Assuming that the assets are available to fill the gap between 59.5 and 67 to receive the maximum, will Social Security record a zero in the final years?
Your social security statement is showing you the benefits that you have already earned, so retiring at 59.5 will not change the amount.
The benefit you see on your statement is based upon the best 35 years of work. You can see the earnings they are using on the statement itself. The administration indexes your annual earnings over time to equal todays dollars. Then it averages the best 35 years and applies a formula to this average that results in what you can expect under the current law at your full retirement age of 67.
Since the administration averages the best earnings years, retiring early and potentially not including the best earnings years, means that you could have a larger benefit at age 67 since the average would be higher.
The only way your benefits would be reduced is if you decide to begin payments sooner than your age 67. You can start retirement benefits as early as age 62, and they will be reduced permanently due to the extra payments.
On the flip side, if you decide to delay benefits beyond age 67, i.e. up to age 70, then your amount will be permanently increased by 8% simple interest.
To answer your final question - SSA will not be recording any zeros on your record, what you see on your statement now is what you can expect at 67, unless the law changes.