A worker's Social Security benefits are reduced for each month that the worker starts getting the benefit before reaching full Social Security retirement age. The reduction is five-ninths of 1 percent of the primary insurance amount of that worker for each of the first 36 months before full Social Security retirement age, and five-twelfths of 1 percent for each additional month.Thus, if a worker retires exactly 36 months before reaching full Social Security retirement age, his benefit will be reduced by 20 percent (36 x 5/9 of 1 percent) of the PIA. If a worker retires 48 months before reaching full retirement age, the benefit will be reduced by 25 percent (36 x 5/9 of 1 percent plus 12 x 5/12 of 1 percent).

Example 1: Your client was born on Sept. 10, 1944. Accordingly, her full Social Security retirement age is 66. She plans to start receiving Social Security benefits when she attains age 62 in September of 2006, based on her own work record. Her PIA will be $1,600 a month at that time. Since she will start receiving benefits 48 months before she reaches full Social Security retirement age, her benefits will be reduced by 25 percent of her PIA. Thus, her monthly benefit will be $1,200 (75 percent of $1,600).

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