What is the Full Retirement Age (FRA)?
The Full Retirement Age (FRA) for Social Security benefits gradually increased from 65 to 67 due to a 1983 amendment to the Social Security Act. This change was made to address increasing life expectancies. Your specific FRA depends on your birth year. For individuals born in 1960 or later, the FRA is 67. Claiming benefits before your FRA leads to a permanent reduction in your monthly payout, while delaying past your FRA can result in increased payments.
The Impact of Claiming Social Security at 65
If your FRA is 67 and you choose to claim benefits at age 65, your monthly benefit will be permanently lower. The reduction is calculated based on how many months you are away from your FRA. For example, someone with an FRA of 67 who claims at 65 will receive approximately 93.3% of their full benefit amount for the rest of their life. This reduction does not change once you reach age 67.
Comparing Different Social Security Claiming Ages
The decision of when to start collecting Social Security benefits is significant and should consider your health, financial situation, and other retirement income. The table below illustrates the difference in potential monthly benefits for someone with an FRA of 67 at various claiming ages:
| Claiming Age | Percentage of Full Benefit | Example Monthly Benefit (based on $2,000 FRA benefit) | Key Consideration |
|---|---|---|---|
| 62 (Earliest Eligibility) | ~70% | $1,400 | Provides income sooner, but is permanently reduced. |
| 65 | ~93.3% | $1,866 | A notable reduction from the full amount, but provides income two years earlier than FRA. |
| 67 (Full Retirement Age) | 100% | $2,000 | The baseline for your full benefit amount. |
| 70 (Maximum Benefit Age) | ~124% | $2,480 | Maximizes your monthly benefit amount for life. |
Key Considerations for Your Claiming Strategy
Your claiming age impacts not only your monthly benefit but also potential spousal and survivor benefits. The break-even point, where the total benefits from delaying catch up to claiming earlier, is often in your late 70s or early 80s. Delaying your claim is often beneficial if you anticipate a longer lifespan. If you plan to work before your FRA, your earnings may temporarily reduce your benefits. However, there is no earnings limit after you reach your FRA. Continuing to work may also increase your benefit amount if your annual earnings are among your 35 highest-earning years. For married couples, delaying benefits for the higher earner can increase the potential survivor benefit for their spouse. Using the SSA's online tools or consulting a financial advisor can help personalize your strategy.
Other Retirement Resources and Health Coverage
Social Security benefits are typically not sufficient as a sole source of retirement income, replacing only about 40% of pre-retirement earnings on average. It's important to utilize other savings like 401(k)s and IRAs. While your Social Security FRA may be 67, Medicare eligibility remains at 65. You should enroll in Medicare within three months of turning 65 to avoid penalties, even if you are delaying your Social Security benefits.
Conclusion: Planning is Key
Retiring at 65 with full Social Security benefits is generally not possible for those born in 1960 or later, as the Full Retirement Age is now 67. Claiming before your FRA results in a permanent reduction in monthly benefits. Careful planning is essential for anyone nearing retirement. Consider your health, anticipated lifespan, other income sources, and the implications for spousal and survivor benefits. By understanding how your birth year affects your benefits and utilizing available resources, you can make an informed decision to support your financial future and retirement goals.
