Understanding the Full Retirement Age (FRA)
When it comes to planning for retirement, understanding the correct full retirement age (FRA) is crucial. While many people believe that 65 is the magic number for retirement, the age has actually been increasing gradually. For anyone born in 1960 or later, the SSA now sets the FRA at 67. This means that claiming benefits at any age before 67, including 64, will result in a permanent reduction in your monthly benefit amount.
The History Behind the Change
The FRA was 65 for many years. However, in 1983, Congress passed legislation to gradually increase the age, a move driven by increasing life expectancies and evolving economic conditions. The change was phased in over several decades, starting with those born in 1938 or later. This gradual increase helps explain why some people may still believe their FRA is an earlier age, leading to confusion when they consider claiming benefits.
The Financial Impact of Claiming Early at 64
While it is possible to begin receiving Social Security retirement benefits as early as age 62, doing so comes with a cost: a permanent reduction of your monthly benefit. If your FRA is 67 and you choose to claim benefits at 64, you will receive a check that is permanently smaller than what you would have received at 67. The SSA calculates this reduction based on the number of months you are claiming before your FRA.
Here’s how the math works for those born in 1960 or later:
- Claiming at age 62: Your monthly benefit is reduced by about 30%.
- Claiming at age 64: The reduction is less severe than at 62 but still substantial. You are claiming 36 months before your FRA of 67, which results in a reduction of approximately 20% compared to your full benefit.
This permanent reduction affects your entire retirement. Every future cost-of-living adjustment (COLA) is applied to this smaller base amount, meaning your benefits will always be lower than if you had waited.
Comparison of Claiming Ages
To put the impact of claiming age into perspective, let's compare the potential monthly benefits based on an FRA of 67. This table assumes a hypothetical monthly benefit of $2,000 at age 67 to illustrate the difference.
| Claiming Age | Approximate Monthly Benefit (as % of FRA) | Potential Monthly Payout | Cumulative Impact |
|---|---|---|---|
| 62 | ~70% | ~$1,400 | Receives payments longer, but at a permanently reduced rate. |
| 64 | ~80% | ~$1,600 | Collects for longer than at FRA, but with a permanent reduction. |
| 67 (FRA) | 100% | $2,000 | Receives the full benefit earned based on work history. |
| 70 | 124% | ~$2,480 | Earns delayed retirement credits, resulting in the highest possible monthly payment. |
It's clear from this comparison that waiting even just a few years can make a significant difference in your monthly income throughout your retirement. For those seeking to maximize their monthly income, delaying as long as possible (up to age 70) is often the best strategy.
Factors to Consider When Making Your Decision
Deciding when to start Social Security is a complex financial decision that depends on your personal circumstances. While the numbers are a critical component, they are not the only factor.
- Health and Longevity: If you have health concerns or a family history of shorter life expectancies, claiming benefits earlier may be more advantageous. The goal is to maximize your total lifetime benefits, not just the monthly amount. Conversely, if you expect to live a long life, delaying can provide a more substantial, inflation-protected income stream.
- Need for Income: Your immediate financial needs play a role. If you lose your job or need the income to cover essential living expenses, claiming at 64 might be necessary, despite the reduction. Remember, you can work while receiving benefits, but your earnings could cause benefits to be withheld if you haven't reached your FRA.
- Spousal and Survivor Benefits: Your claiming age can also impact your spouse's benefits. If you are the higher earner, delaying your claim can increase the survivor benefit your spouse may receive. This is a critical consideration for married couples.
- Working in Retirement: For those who continue to work, delaying benefits can allow your earnings to replace lower-earning years in your Social Security calculation, potentially increasing your benefit amount even more.
Medicare Enrollment
An important consideration that is separate from your Social Security claiming age is Medicare enrollment. While the earliest you can claim Social Security is 62, Medicare eligibility begins at age 65 for most people. You should still sign up for Medicare during the three-month period before your 65th birthday, even if you are not yet claiming Social Security benefits. Delaying your enrollment can result in lifelong penalties and higher premiums. For more information on your specific retirement benefit and claiming options, visit the official Social Security Benefits Planner.
Conclusion: Making the Right Choice for You
In conclusion, 64 is not considered the full retirement age for Social Security for those born in 1960 or later. Claiming benefits at this age will mean accepting a permanently reduced monthly payment, which can have a major effect on your long-term financial security. While delaying until your FRA of 67 or even age 70 offers a larger monthly benefit, your personal circumstances, including health, financial needs, and spousal considerations, should guide your decision. By understanding the rules and carefully weighing your options, you can make an informed choice that best supports your retirement goals.
