KHN – The age at which you can claim your full Social Security retirement benefits has shifted over the years, leaving many Americans uncertain about when they can receive their full pension. While many believe that 65 or 67 is the standard retirement age, the reality is more nuanced.
The Social Security Administration (SSA) has gradually adjusted full retirement age (FRA) based on birth year, meaning your eligibility for full benefits depends largely on when you were born.
Why the Retirement Age Has Changed
The concept of retiring at age 65 has been ingrained in American society since Social Security was first introduced in 1935. However, due to increasing life expectancy and financial strain on the system, the federal government began adjusting the retirement age. The Social Security Amendments of 1983 introduced gradual increases in the FRA to help sustain the program for future generations.
This shift means that not everyone will qualify for full retirement benefits at 65—or even 67. The changes are designed to reflect longer lifespans and to ensure that Social Security remains financially stable.
The Full Retirement Age Based on Birth Year
Your full retirement age varies depending on the year you were born. Here’s a breakdown of when individuals can start collecting their full Social Security benefits:
| Year of Birth |
Full Retirement Age (FRA)
|
| 1943 – 1954 | 66 |
| 1955 |
66 and 2 months
|
| 1956 |
66 and 4 months
|
| 1957 |
66 and 6 months
|
| 1958 |
66 and 8 months
|
| 1959 |
66 and 10 months
|
| 1960 or later | 67 |
For those born in 1960 or later, the full retirement age has been set at 67. However, individuals born before 1960 still fall under the older guidelines, allowing them to receive full benefits as early as 66, depending on their exact birth year.
Can You Retire Earlier?
While the FRA determines when you can receive full benefits, early retirement is still an option for those who need financial support sooner. You can begin claiming Social Security as early as age 62, but doing so will result in reduced monthly payments. The earlier you start collecting benefits before your FRA, the greater the reduction.
For example:
- If your FRA is 67 and you retire at 62, your monthly benefit could be reduced by as much as 30%.
- If your FRA is 66 and you retire at 62, your benefits could be reduced by about 25%.
Early retirement might be appealing, but it’s essential to weigh the long-term financial impact, especially if you plan to continue working part-time, as this can also affect your benefits.
What If You Delay Retirement?
On the other hand, delaying your retirement beyond your FRA can increase your monthly Social Security benefits. For every year you postpone claiming benefits past your FRA, you earn delayed retirement credits that can boost your payout.
- Benefits increase by about 8% for every year you delay up until age 70.
For instance, if your FRA is 67 and you wait until age 70 to claim Social Security, your benefits could increase by up to 24%, providing you with a significantly higher monthly income later in life.
Factors to Consider When Deciding When to Retire
Deciding when to claim Social Security is a personal choice and should be based on several factors:
- Life Expectancy: If you expect to live a longer-than-average life, delaying benefits could maximize your lifetime payout.
- Health Status: If you face health challenges, taking benefits earlier might be more practical.
- Financial Needs: If you require additional income to cover basic living expenses, claiming benefits earlier may be necessary.
- Employment Plans: Continuing to work beyond FRA can increase your benefits and provide additional financial security.
- Spousal Benefits: Married individuals should consider how their retirement age affects spousal and survivor benefits.
Why Understanding FRA Matters
Knowing your full retirement age is essential for making informed financial decisions. Claiming Social Security benefits too early can permanently reduce your monthly income while delaying benefits can result in higher payments for the rest of your life.
It’s also important to remember that Medicare eligibility remains at 65, regardless of your FRA. This can influence retirement planning since healthcare coverage can be a significant financial factor for retirees.
Final Thoughts
Contrary to popular belief, neither 65 nor 67 is a universal retirement age for Social Security benefits. Your full retirement age depends on when you were born, with those born in 1960 or later needing to wait until age 67 to receive full benefits. Understanding your FRA, along with the pros and cons of retiring early or delaying retirement, can help you make the best financial decision for your future. Taking the time to plan carefully could ensure that you maximize your Social Security benefits and secure a comfortable retirement.