When it comes to Social Security, one of the most crucial decisions you’ll make is when to begin claiming your benefits. However, the retirement age for full benefits isn’t the same for everyone. Depending on when you were born, your full retirement age (FRA) could differ, and this can significantly affect the amount of money you receive from Social Security.
Understanding how FRA works, and the trade-offs involved in claiming benefits early or delaying them, is essential to making an informed decision about your retirement. This article will provide the details you need to navigate your Social Security retirement age and claim benefits at the right time.
What is Full Retirement Age (FRA)?
Your Full Retirement Age is the age at which you can begin receiving your full Social Security retirement benefits without any reductions. However, the age varies depending on the year you were born.
According to the Social Security Administration (SSA), the FRA gradually increases as people live longer. Those born between 1943 and 1954 have an FRA of 66. After that, the FRA begins to increase incrementally based on your birth year. Here’s the breakdown:
| Year of Birth | Full Retirement Age |
|---|---|
| 1943–1954 | 66 |
| 1955 | 66 years, 2 months |
| 1956 | 66 years, 4 months |
| 1957 | 66 years, 6 months |
| 1958 | 66 years, 8 months |
| 1959 | 66 years, 10 months |
| 1960 and later | 67 |
If you were born on January 1st, your FRA is considered the same as if you were born in the previous year. This means that even though you were born in a later year, your retirement age will align with the year before.
Claiming Early or Delaying: What’s the Impact?
The age at which you decide to start receiving Social Security benefits can significantly affect how much you get each month. Let’s dive into the two main choices: early retirement and delayed retirement.
1. Early Retirement
You can start claiming Social Security as early as age 62, but doing so means that your benefits will be reduced. The reduction is about 0.56% per month (or 6.7% per year) before your full retirement age.
For example, if your full retirement age is 67 and you choose to start claiming at 62, you’ll receive about 30% less than you would have if you waited until 67. While you may need the income earlier, this option results in a lower monthly benefit for the rest of your life.
2. Delayed Retirement
On the other hand, if you choose to delay claiming your benefits, you can increase your monthly benefit. For every year you wait past your FRA, your monthly benefit increases by 8% until you turn 70. So, if your FRA is 67 and you wait until 70, you’ll receive 124% of your monthly benefit.
The decision to delay your benefits can be particularly beneficial if you are in good health and expect to live longer. It allows you to maximize your Social Security benefits, but it requires patience.
Why is Full Retirement Age Increasing?
In 1983, lawmakers passed amendments that gradually increased the FRA from 65 to 67. The increase was designed to help the Social Security program stay financially viable, as people are living longer and working beyond traditional retirement years.
By increasing the FRA, the government can ensure that Social Security funds remain available for future generations. The 1983 amendments also created Social Security’s “earnings test”, which affects individuals who work while receiving benefits before their FRA.
What Happens if You Work After FRA?
Another aspect to consider is working after reaching your FRA. If you continue working while receiving Social Security benefits, your earnings will not affect the amount you receive once you hit your FRA. However, if you claim benefits before your FRA and continue to work, your benefits may be temporarily reduced.
The Social Security Administration provides a tool called the Earnings Test that allows you to estimate how much your benefits will be affected based on your income.
How Do You Apply for Social Security?
You can apply for Social Security benefits online, by phone, or in person at your local Social Security office. The SSA recommends applying for benefits three months before the date you want to start receiving payments.
To apply online, visit the Social Security Benefits page.
Conclusion
Choosing when to begin receiving Social Security benefits is one of the most significant decisions you’ll make in retirement. The full retirement age varies depending on your birth year, and while claiming early offers immediate access to funds, it results in reduced monthly payments. Alternatively, waiting to claim benefits past your FRA can increase your monthly benefit, but it requires patience and the ability to support yourself without Social Security income for a few extra years.
