Question

Some people take the early retirement option at age 62. According to the Social Security Administration, if you retire at age 62, your retirement benefits will be permanently reduced by 25%. If your monthly benefit, at full retirement age (67), would have been $1300 per month, and you retire at age 62, how much would you lose in total annual income over one year?

Answer 1

Answer: $3,900

Explanation:

What you usually make:

$1300 * 12 months = $15600

What you make with the cut:

$1300 * 0.75 = $975

* 12 months = $11700

15600-11700 = $3900

Answer 2

$3900.

Explanation:

If retirement is taken at the age of 67 years, income = $1300 per month.

% Loss, if retirement taken at the age of 62 years = 25% per month

Loss in dollars per month if retirement taken at the age of 62 years = 25% of Monthly income if retirement is taken at the age of 67 years

`\Rightarrow (25)/(100) * 1300\\\Rightarrow (1300)/(4)\\\Rightarrow 325 \$`

We know that there are 12 months in an year.

So, annual loss in total annual income over one year:

Loss in dollars per month
`*` 12 :

325
`*` 12 = 3900$