As life expectancy increases, so does the age at which individuals can claim their full Social Security benefits. This gradual increase in the Full Retirement Age (FRA) is a part of a larger strategy to reflect longer lifespans and ensure the solvency of Social Security for future generations. If you’re nearing retirement age or planning for it, understanding these changes is crucial for maximizing your benefits.
What is Full Retirement Age (FRA)?
The Full Retirement Age (FRA) is the age at which you are eligible to receive 100% of your Social Security retirement benefits. If you choose to start receiving benefits earlier than your FRA, your monthly payments will be reduced. On the other hand, if you delay claiming benefits until after your FRA, you will receive higher monthly payments, with the amount increasing by about 8% per year until age 70.
The Gradual Increase in Full Retirement Age
In 1983, the U.S. Congress passed a law that gradually increased the Full Retirement Age from 65 to 67 for those born after 1937. This change was made to address the increasing longevity of the population. Here’s a breakdown of the Full Retirement Age by birth year:
| Year of Birth | Full Retirement Age |
|---|---|
| 1937 or earlier | 65 years |
| 1938 | 65 years, 2 months |
| 1939 | 65 years, 4 months |
| 1940 | 65 years, 6 months |
| 1941 | 65 years, 8 months |
| 1942 | 65 years, 10 months |
| 1943-1954 | 66 years |
| 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 or later | 67 years |
This adjustment means that if you were born in 1960 or later, you won’t be able to claim full benefits until you turn 67.
Claiming Social Security Benefits Early or Late
Although you can begin claiming Social Security benefits at age 62, this will come with a reduced monthly benefit. The longer you wait, the higher your benefits will be, up until you reach age 70. Here’s a closer look:
- Claiming at 62: Your benefit will be permanently reduced, generally by about 30% if your FRA is 67. For example, if your full benefit is $1,000, starting at 62 might reduce it to $700.
- Claiming at Full Retirement Age: You will receive 100% of your monthly benefit. So, if your full benefit is $1,000, you’ll get the full amount at your FRA.
- Delaying Until Age 70: If you wait until age 70, your monthly benefit will increase by about 8% per year after your FRA. For instance, if your full benefit is $1,000, waiting until 70 will boost it to approximately $1,240.
Why is the Full Retirement Age Increasing?
The primary reason for the increase in FRA is to keep the Social Security system financially sustainable. As people live longer, they rely on Social Security benefits for a longer period of time. By raising the FRA, the system can better handle the growing number of retirees while ensuring continued solvency.
This change also aligns with the fact that the average life expectancy has increased significantly since Social Security was first introduced in 1935. In 1935, the average life expectancy for men was 60 years and for women, it was 64 years. Today, the average life expectancy is around 79 years, which means retirees are receiving benefits for a longer time than originally anticipated.
What Does This Mean for You?
If you are planning to retire soon, it’s important to understand your FRA, as it determines when you can expect to receive your full Social Security benefits. Here’s what to keep in mind:
- Plan ahead: The increase in FRA could impact how you plan for retirement. The decision of when to claim Social Security should be part of your overall retirement strategy.
- Consider your health and lifestyle: If you’re in good health and expect to live for many more years, delaying benefits might make sense. However, if your health is declining or you need the income earlier, claiming at 62 may be the best option for you.
- Stay informed: Social Security rules and benefits can change, so it’s essential to keep up with updates and consult with a financial advisor for personalized advice.
For more about how the Full Retirement Age works and to calculate when you’ll be eligible for full benefits, visit the Social Security Administration’s website.
Key Takeaways
- Social Security’s Full Retirement Age (FRA) has increased gradually and will continue to rise for people born after 1937.
- If you wait until your FRA, you can receive 100% of your Social Security benefits. Delaying until age 70 increases the benefit by about 8% per year.
- The increase in FRA reflects rising life expectancy and aims to ensure the solvency of the Social Security system.
Retirement planning is more than just saving money; it’s about understanding how benefits work and when to claim them. By staying informed about the changes to Social Security’s Full Retirement Age, you can make the best decisions for your future.
Conclusion
Understanding the gradual increase in Social Security’s Full Retirement Age is essential for effective retirement planning. With the age for full benefits rising based on your birth year, it’s crucial to know when you can expect to receive 100% of your benefits and how waiting or claiming earlier can impact your monthly payments. The decision of when to start claiming Social Security is a significant one that depends on factors such as your health, financial situation, and retirement goals.
