An advisor recently pointed out that her client born in October 1954 (FRA = 66) is having different benefits at age 62 and 70 than what’s reported on the official Social Security statement.  age Why is it so?

Here’s the answer:

Let’s say that official Social Security statement has the benefits at FRA (66) as $2,207 per month. In this case, this client’s benefits at age 62 will be 25% lower. That comes to (1 – 0.25) * $2,207 = $1,655 per month. This is based on zero COLA (Cost of Living Adjustment). The delayed benefits at age 70 would be 32% higher (8% per year after FRA). So benefits at age 70 would be (1+0.32)*2207 = $2,913 per month.  These two numbers can be different from those reported on the official Social Security statement for two reasons:

1.  Assumptions around this client’s future income and Social Security tax payments until retirement.

2. The official Social Security may have a different COLA assumption.