“However the money withheld during the ages 62-67 (assuming your FRA age is 67) would start getting paid back to you at FRA. So you would end up with a higher monthly payment at FRA.”
Question -
You would be paid back ONLY the total amounts withheld?
Would your monthly benefit then be reduced to that amount set at the date you started collecting?
Let's say your FRA is 67 but you filed at 62 and your monthly benefit was $1,000/mo (to use a round number). However, you worked during that time and over the five years you had $36,000 withheld over that period of time (to use another round number).
At age 67, the SSA would take that $36,000 of withheld benefits into account (three years of benefits) and start paying you as though you started collecting benefits at 65 (three years) instead of at 62.
Which would be $1,259/mo instead of the $1,000/mo you were eligible for at 62 (8% increase per year by waiting).
So in practice, you would recover that withheld money back over the next 139 months (about 11.5 years).
All of the above is not factoring in COLA but hopefully that explains the basic methodology.