A recent article in the Wall Street Journal entitled “Social Security Claims Get Earlier” reported that more Americans are claiming their Social Security retirement benefits at the earliest possible age – age 62. This is happening even though by claiming retirement benefits at age 62, it can possibly result in less Social Security income over the Social Security beneficiary’s life.
Among the reasons cited by the Social Security Administration (SSA) for the increasing number of individuals claiming benefits at age 62 is “fearmongering”. “Fearmongering” in the sense that the Social Security system is running out of money and will not be able to pay full monthly benefits to beneficiaries within the next 10 years.
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Given the likelihood that many federal employees will be retiring in the next few years when they are in their early 60’s, there is a good chance that these retiring employees will elect to start receiving their Social Security retirement benefits when they become age 62. This column discusses the “entire month” rule that applies to individuals who apply for their monthly Social Security retirement benefit when they reach their 62nd birthday.
As mentioned, the earliest age an individual who is “fully insured” with respect to Social Security (the individual has earned a minimum 40 credits of Social Security) can receive their Social Security retirement benefit is age 62. However, according to the SSA fewer than 7 percent of individuals who are ‘fully insured” are eligible to begin receiving their monthly Social Security retirement in the month they become age 62. Why is that?
The reason that so few individuals can claim their Social Security retirement benefit in the month they become age 62 is because of a little known SSA rule tied to the claimant’s day of birth. To be eligible for the retirement benefit starting the month the claimant becomes age 62, the claimant must be 62 years old for the entire month. The SSA applies English common law to determine when an individual actually becomes a specific age. In particular, an individual is considered officially to be a specific age as of the day before his or her birthday. The following example illustrates:
Example 1. Elizabeth was born May 7, 1963. According to the SSA, Elizabeth will officially be 62 years old as of May 6, 2025.
The SSA also has a rule that applies to Social Security beneficiaries who are claiming their monthly retirement benefits starting when they are age 62. That rule says that in order for a beneficiary to receive his or her first monthly Social Security retirement benefit check when they become age 62, the beneficiary must be age 62 for an entire calendar month before the first benefit check is issued in the following month.
When this SSA “age 62” rule and “official age date” principle is applied to claiming Social Security retirement benefits starting in the month an individual becomes age 62, only individuals born on the 1st or 2nd of a month are considered age 62 for the entire month and are therefore eligible to claim their Social Security retirement benefit starting in the month they become age 62. Returning to Example 1 with Elizabeth, the first full month in which Elizabeth will be age 62 will be June 2025. Elizabeth will not be eligible to receive her first monthly Social Security retirement benefit until July 2025. Here is another example:
Example 2: Dennis was born June 2, 1963. According to the SSA, Dennis will be 62 years as of June 1, 2025. Dennis’ first full month in which he will be 62 years old will therefore be June 2025. Dennis is therefore eligible to receive his first monthly Social Security retirement benefit check during July 2025.
Those individuals who were born on the third day or later of a month and who want to begin receiving their monthly Social Security retirement benefit at age 62 cannot start receiving their monthly benefit until the month after they become age 62. While this may seem like a minor technicality, it can result in an unexpected income gap for those individuals who are dependent on Social Security income to begin immediately in the month they become age 62.
This “entire month” rule only applies to those individuals who are claiming their monthly Social Security retirement benefit at age 62. For those individuals who are claiming their Social Security retirement benefit starting in any other month starting in the month they become age 63, the “entire month” rule does not apply.
The following example illustrates someone who reaches their reach their full retirement age (FRA – age 67 for anyone born after December 31, 1959) in which the monthly retirement benefit begins in the month FRA is reached, regardless of an individual’s exact birth date:
Example 3. Janet was born October 17,1958. Her full retirement age (FRA) is 66 years and 8 months. Janet has postponed receipt of her monthly Social Security retirement benefit until she reaches her FRA. Janet reaches her FRA on June 17, 2025. Janet plans to apply for her first monthly Social Security monthly benefit in June 2025, the month she becomes FRA. Janet’s first monthly Social Security retirement benefit check will be directly deposited in her bank account during July 2025.
Those federal employees who plan to retire before reaching their FRA should consider the consequences of starting their Social Security monthly benefits before reaching their FRA. Postponing the start of the monthly Social Security retirement benefit results in higher monthly benefit. Federal employees who retire before their FRA are advised to find other sources of retirement income to help bridge the income gap before they reach MRA. One such source of retirement income is the traditional TSP. Besides bridging any income gap during this period, withdrawals from the traditional TSP when a federal retiree is in their 60’s will result in potentially lowering the TSP participant’s required minimum distribution (RMD) when the TSP participant reaches his or her required beginning date, currently April 1 following the year the TSP participant becomes age 73.