If Bill retires at age 62 and claims social security retirement benefits, what will happen to those benefits?

When an individual claims Social Security retirement benefits before reaching their Full Retirement Age (FRA), such as retiring at age 62, their benefits are permanently reduced. This reduction occurs because starting benefits early means the individual will receive payments over a longer period, which is taken into consideration by the Social Security Administration.

The benefit amount is calculated to provide an actuarial adjustment—not only for the earlier start but also to ensure that payouts are sustainable over time. This means that the benefits Bill would receive at age 62 will be lower than if he had waited until his FRA to claim them. Specifically, the reduction for claiming at 62 can be substantial, as benefits are reduced approximately 25-30% compared to the amount he would have received if he had claimed at his FRA. Thus, choice B accurately reflects the consequences of claiming Social Security benefits early.