Your client turns 62 and wants to start collecting Social Security. The difference between claiming at 62 and 70 for a PIA of $2,400 is $1,296/month ($15,552/year) for the rest of their life, adjusted for inflation.
Social Security requires 40 credits (10 years of covered work). In 2026, one credit per $1,810 in earnings, max four per year. Benefits are based on the 35 highest-earning years, indexed for wage growth, producing Average Indexed Monthly Earnings (AIME). AIME converts to the Primary Insurance Amount (PIA), your monthly benefit at full retirement age.
FRA is 67 for those born 1960 or later. That is the exam's default.
HIGH-FREQUENCY: You can claim as early as 62. The reduction is permanent. It is charged per month of early claiming, not per year, and the monthly rate steps down once you are more than three years early:
- The first 36 months before FRA cost 5/9 of 1% each. 5/9 of 1% is 0.5556% per month, which is 6.67% per year.
- Any month beyond that first 36 costs 5/12 of 1% each. 5/12 of 1% is 0.4167% per month, which is 5% per year.
Common mistakes
- Believing the early reduction reverses at FRA. If Tom claims at 62 at $1,680/month, he does not jump to $2,400 at 67. The reduction is permanent. Only COLAs apply going forward. Trap: $2,400 as the age-67 benefit for someone who claimed at 62.
- Treating WEP and GPO as currently in effect. The Social Security Fairness Act repealed both, retroactive to January 2024. Benefits payable for January 2024 and later are not subject to either provision. The pre-2024 mechanics are testable as historical context, but a question asking about a 2024+ retirement should not apply the offset.
- Assuming COBRA counts for the Medicare SEP. COBRA is not active employer coverage. Delaying Part B while on COBRA triggers a permanent late enrollment penalty. Trap: "no penalty" for a COBRA-covered individual.
Bottom line
- Eligibility: 40 credits (10 years). FRA = 67 for those born 1960+. Claiming at 62 reduces benefits by up to 30% permanently.
- Delayed retirement credits: 8% per year from FRA to 70 (max 24% increase). No credits accrue after age 70.
- Spousal benefits max at 50% of the higher earner's PIA at FRA, with no delayed credits. Survivor benefits equal 100% of the deceased's benefit including delayed credits.
- WEP and GPO were repealed by the Social Security Fairness Act (signed January 5, 2025; retroactive to January 2024). Pre-2024: WEP cut the worker's own benefit; GPO cut spousal/survivor by 2/3 of the government pension.
Exam shortcut
Three benchmarks: 62 = 70% PIA (30% cut), 67 = 100% PIA, 70 = 124% PIA (24% boost). Early reduction: "5/9 for 36, then 5/12 for the rest." WEP and GPO: repealed January 2024 by the Social Security Fairness Act, but remember the pre-2024 mechanics. WEP = Worker's own benefit reduction. GPO = Gift to spouse wiped out at 2/3 of government pension. Medicare penalty: "10-1-COBRA NO".
The full lesson (about 3,118 words, 21 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- F.45
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