Understanding Your Full Retirement Age (FRA)
For many years, 65 was considered the standard retirement age for Social Security. However, due to legislation passed in 1983, the Full Retirement Age (FRA) has been gradually increasing. For anyone born in 1960 or later, the FRA is 67. This change has been phased in over decades, and assuming 65 is still the milestone age is one of the biggest misconceptions in retirement planning.
Your FRA is the age at which you are entitled to receive 100% of your primary insurance amount (PIA), which is your basic Social Security benefit based on your lifetime earnings. Claiming benefits before your FRA results in a permanent reduction, while waiting past your FRA can result in a significant increase.
The Impact of Claiming Early vs. Delaying
If you choose to start receiving benefits at 65, and your FRA is 67, your monthly benefit will be permanently reduced. The reduction is calculated on a monthly basis, resulting in a smaller check for the rest of your life. On the other hand, delaying your benefits past your FRA can earn you a higher monthly payment. For each year you wait past your FRA, up to age 70, you earn delayed retirement credits, which significantly increase your monthly check.
- Claiming at 62: You can claim benefits as early as age 62, but they will be permanently reduced by as much as 30% if your FRA is 67.
- Claiming at 65: For someone with an FRA of 67, claiming at 65 means a permanent reduction of about 13.3%.
- Claiming at 67: If your FRA is 67, claiming at this age means you receive 100% of your earned benefit.
- Claiming at 70: Delaying until age 70 can increase your monthly benefit by up to 24% over your FRA amount for those with an FRA of 67. There is no further increase after age 70.
What Truly Increases Your Social Security Check?
While turning 65 is not a trigger for an automatic benefit increase, there are other factors that can raise your monthly check. The two main ones are Cost-of-Living Adjustments (COLAs) and your continued work history.
Cost-of-Living Adjustments (COLAs)
Since 1975, Social Security benefits have included automatic Cost-of-Living Adjustments (COLAs). These increases are designed to help your benefits keep pace with inflation, as measured by the Consumer Price Index. The COLA is typically announced in October and goes into effect the following January. All current Social Security beneficiaries receive the COLA, regardless of their age.
Additional Work History
Even if you are already receiving benefits, continuing to work can potentially increase your monthly payment. The Social Security Administration (SSA) calculates your benefit based on your 35 highest-earning years. If you work another year and your earnings are among your top 35, the SSA will automatically recalculate your benefit to reflect the higher lifetime earnings. This can lead to a slight increase in your monthly check. For detailed information on this process, visit the official Social Security website, which provides resources on how additional work can increase your future benefits.
The Earnings Test and Reaching Full Retirement Age
One specific rule that causes confusion for those working while collecting benefits is the earnings test. This test applies to those who claim benefits before reaching their FRA. If you earn more than a certain amount, some of your benefits will be withheld. However, this is temporary.
Once you reach your FRA, the earnings test no longer applies, no matter how much you earn. At that time, the SSA will recalculate your benefit amount, giving you credit for the benefits that were previously withheld. This recalculation will result in a higher monthly check going forward, but it is a credit for past withholding, not an automatic bonus for turning a specific age.
| Feature | Claiming Benefits at Age 65 (FRA 67) | Claiming Benefits at Age 67 (FRA 67) |
|---|---|---|
| Monthly Benefit | Permanently reduced (approx. 13.3%) | 100% of Primary Insurance Amount (PIA) |
| Lifetime Benefits | Higher cumulative payments if you have a shorter life expectancy | Higher annual payments if you have a longer life expectancy |
| Earnings Test | Subject to annual earnings limit if still working | Not subject to the earnings test |
| Benefit Recalculation | Possible increase at FRA to account for benefits withheld due to earnings | N/A |
Conclusion: Age Isn't the Only Factor
In summary, the notion that your Social Security check gets a boost when you turn 65 is a myth based on outdated rules. The most significant factors determining your monthly benefit are your claiming age relative to your personalized Full Retirement Age, your lifetime earnings, and annual Cost-of-Living Adjustments based on inflation. For most modern retirees, waiting until your FRA or even age 70 offers the greatest financial reward over your retirement years. It's vital to research your specific FRA and consider your individual circumstances when deciding when to start collecting your Social Security benefits.
For more information and to get a personalized benefit estimate, you can create a my Social Security account on the official Social Security Administration website at ssa.gov.
