Social Security Claiming Age

Definition

The age at which a worker first claims Old-Age and Survivors Insurance (OASI) benefits from Social Security, which can range from the Early Entitlement Age (EEA, currently 62) to age 70. Claiming before the Full Retirement Age (FRA) results in an actuarially reduced benefit; claiming after the FRA results in Delayed Retirement Credits (DRCs). The claiming decision is distinct from — though often correlated with — the labor force exit decision.

Key Ideas

Early Entitlement Age (EEA): Currently age 62 for all workers. Claiming at $62$ with $\text{FRA}=66$ yields $75\%$ of the Primary Insurance Amount (PIA); each additional month of delay raises the benefit by $5/9$ of $1\%$ up to the FRA, then by $2/3$ of $1\%$ per month above FRA (DRCs) up to age 70.
Break-even age: The age at which cumulative lifetime benefits from claiming at 62 equal cumulative lifetime benefits from claiming later. With $\text{FRA}=66$ , break-even is roughly age $78$ – $79$ for single claimers in expectation — meaning actuarial value of delayed claiming is slightly positive for those who live past their late 70s, but break-even is ambiguous given individual longevity uncertainty.
Earnings test — causal employment effect: For workers who claim before FRA and continue earning above a threshold ( $\approx \$22{,}000$ per year in 2024), Social Security withholds $\$1$ for every $\$2$ earned above the limit. Benefits are restored after FRA via a recalculated higher monthly benefit. Gelber, Jones, and Sacks (2014; 2017; 2019) provide the clearest causal evidence: the earnings test reduces the employment rate by ≥3.7 pp at ages 63–64. Moreover, earnings-test frictions persist after the test is lifted — workers continue to bunch earnings near the limits at ages 70–71 when no test exists — suggesting rule-of-thumb behavior amplifies the distortion beyond the binding ages.
Psychology of claiming: Experimental survey evidence (summarized in Brown et al. 2020) documents large framing effects on intended claiming age. Individual loss aversion (measured by gambling choices) predicts claiming intentions ~6 months earlier. Longevity salience (prompting respondents to think of someone who lived long into retirement) delays intended claiming by 9 months. Targeted informational messages delay intended claiming by 5–10 months. These effects are large relative to the financial incentives involved, suggesting that how Social Security claiming options are framed matters as much as the actuarial structure.
Retirement bundling: Empirically, claiming at 62 strongly predicts simultaneous work exit and liquidation of defined-contribution (DC) pension balances. Armour and Knapp (2021) document a $40$ percentage points (pp) higher probability of labor force exit among age-62 claimers vs. matched later claimers.
Actuarial fairness: The benefit schedule is approximately actuarially fair for workers of average life expectancy, but substantially advantageous to delayed claiming for those with above-average health and longevity, and disadvantageous for those with short remaining life expectancy.
Spousal benefits: Early claiming also reduces spousal survivor benefits, making the claiming-age decision a joint household optimization that depends on the age gap and relative longevity expectations between spouses.

How It Works

Workers reaching age 62 can file for reduced OASI benefits. The reduction factor is $5/9$ of $1\%$ per month for the first $36$ months before FRA ( $= 20\%$ for $\text{FRA}=66$ ) and $5/12$ of $1\%$ per month for additional months ( $= 25\%$ for $\text{FRA}=67$ ). For a worker with $\text{FRA}=66$ , claiming at $62$ yields $75\%$ of PIA; at $63$ , $\approx 80\%$ ; at $64$ , $\approx 86.7\%$ ; at $65$ , $\approx 93.3\%$ ; at $66$ , $100\%$ . After FRA, DRCs of $8\%$ per year accrue through age $70$ , so claiming at $70$ with $\text{FRA}=66$ yields $132\%$ of PIA.

The earnings test applies until FRA. After FRA, there is no earnings test — the 2000 Senior Citizens' Freedom to Work Act eliminated the earnings test above FRA, creating a discontinuity in the work incentive at FRA.

Why It Matters

Policy: Proposals to raise the EEA (e.g., from $62$ to $64$ ) would force workers currently claiming at $62$ to either continue working, draw down savings, or seek disability insurance (DI)/Supplemental Security Income (SSI). Armour and Knapp (2021) show that early claiming bundles with work exit and DC liquidation, suggesting an EEA increase would delay retirement and preserve retirement assets for a substantial fraction of workers.
Wealth accumulation: Age-62 claimers accumulate $\approx 27\%$ less liquid non-housing wealth by age 70 than matched later claimers, primarily because later claimers continue saving — not because early claimers spend more rapidly. The wealth divergence widens into the 70s as higher delayed benefits compound.
Longevity insurance: Delayed claiming is equivalent to purchasing longevity insurance at an implicit price — forgoing income before FRA in exchange for a higher annuity for life. The value of this insurance grows substantially after age 80, a period outside the Armour-Knapp study window.
Early Retirement Safety Net Gap: Workers who stop working at 62 but are not eligible for DI or SSI rely entirely on OASI early claiming as income. Raising the EEA without a corresponding bridging program would remove income support for health-impaired workers aged 62–63 who fail DI medical criteria. See Early Retirement Safety Net Gap.
Retirement Age Stickiness: In contrast to the EEA, FRA increases shift claiming age one-for-one but do not shift labor force exit (Deshpande, Fadlon, Gray 2021). At the EEA, the mechanism runs in the opposite direction: claiming drives retirement, not vice versa. See Retirement Age Stickiness.

Open Questions

Does delaying claiming from 62 to 63 or 64 produce the same retirement-bundling effect, or is 62 a salient focal point that generates uniquely strong retirement-claiming correlation?
What fraction of the wealth gap is due to continued earnings by later claimers vs. higher Social Security income in later years vs. different savings rates?
How does the EEA interact with employer retirement norms that anchor labor force exit at 65 (the stickiness finding)? Workers with employment anchored at 65 are less likely to have their claiming and retirement decisions bundled at 62.
Does the null mortality result through age 78 imply that delayed claiming provides no longevity insurance value on average, or does the censoring of the study sample before age 80 explain the null?
What is the welfare effect of an EEA increase for the Early Retirement Safety Net Gap population — those who claim at 62 because they have no DI-qualifying impairment but have substantial health limitations?